HSBC India Services PMI Rises To 58.8 In May

Bengaluru, June 5 — India’s formidable services sector continued its growth story in May, owing to strong export demand and unprecedented hiring activity as reported by the latest HSBC India Services Purchasing Managers’ Index (PMI) compiled by S&P Global. This is an exciting update for the overall economic development as more than half of the country’s GDP is attributed to the service sector.

PMI Stays Strong, Surpasses Growth Threshold

The Services PMI stood at 58.8 in May, a marginal uptick from April’s 58.7. This marked its nearly four-year streak above the 50-point threshold that signals expansion. However, the figure did not beat the preliminary estimate of 61.2.

Demand and Export Orders Fuel Momentum

There was a significant increase in new business volumes during the month, similar to the period between February and April. Firms have attributed this high demand to the media and advertising campaigns, repeat orders from clients, and overall positive market sentiment.

Significantly, export orders surged to one of the highest levels in the survey’s over 10-year history, highlighting the sector’s growing global competitiveness.

Record Hiring Since 2005

As the demand for services has risen, workforce hiring has also increased rapidly, with almost 16% of surveyed firms reporting more staff. This is another indication of overall trust in future trends.

Rising Costs Trigger Inflationary Concerns

However, the sector has witnessed intensive price pressures as input and output costs both rose in May. Higher inflation and overtime wages can influence the sector’s costs.

Implications for Monetary Policy

Inflationary pressures were reported when the RBI reduced the repo rate by 50 basis points in 2025. The central bank is anticipated to provide a further 25 basis points cut during the upcoming policy review.

Business Confidence Rebounds

Despite cost-related challenges, business sentiment improved, rebounding from April’s 23-month low. Firms expressed optimism based on their expanding workforce, broader client networks, and ongoing marketing strategies.

Composite PMI Reflects Broad-Based Growth

Meanwhile, the HSBC India Composite PMI Output Index, which tracks manufacturing and services activity, eased slightly to 59.3 in May from 59.7 in April, indicating strong growth across the private sector.

India’s service sector is a critical component of the economy, contributing more than 50% of the GDP. May’s data underline demand resilience, job creation, and positive international traction, even though rising costs remain a concern.

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