India’s services sector maintains strong momentum in May; job creation hits record high

India’s services sector showed continued strength in May, with businesses reporting solid growth in activity, hiring, and international demand. The HSBC India Services PMI Business Activity Index edged up to 58.8 from 58.7 in April, reflecting another sharp expansion. A reading above 50 indicates growth, while anything below signals contraction.

The sector’s momentum was underpinned by healthy demand conditions, effective advertising, and repeat orders from loyal customers. Firms also gained new clients and reported a surge in export orders, particularly from Asia, Europe, and North America.

“India registered a 58.8 services PMI in May 2025, broadly in line with the steady readings from recent months. Strong international demand continued to fuel services activity, as evidenced by the new export business index's uptick from April,” said Pranjul Bhandari, Chief India Economist at HSBC.

With demand swelling, companies expanded their workforce at a record pace. Nearly 16 per cent of firms surveyed said they hired more staff, while only 1 per cent reported job cuts. The result: the strongest rate of job creation in the history of the survey.

This hiring spree, along with overtime wages and higher input costs—especially for cooking oil, meat, and materials—led to increased cost pressures on firms. Output charge inflation also rose slightly above average.

Despite the rising costs, businesses were more optimistic about the future. They expect larger client bases, improved staffing, and targeted marketing to boost activity in the coming months.

Meanwhile, the HSBC India Composite PMI Output Index, which includes both manufacturing and services, came in at 59.3 in May—slightly down from 59.7 in April—mainly due to softer factory output, even as services grew faster.

The survey, compiled by S&P Global, covered around 400 service sector firms including finance, transport, communication, and real estate.