India’s services growth hits six-month high as demand rebounds
India's services PMI jumped to 59.8 in May, but softer confidence and cautious hiring show the rebound is still uneven.
India’s services economy is expanding quickly again, but the headline gain is running ahead of the lived reality. The HSBC India Services PMI climbed to 59.8 in May from 58.8 in April, its strongest reading since November 2025, yet business confidence fell for a second straight month and global orders remained below last year’s average.
The pickup was not limited to one corner of the market. Demand improved across freight, digital solutions, e-commerce, entertainment and information technology, a spread that points to a broader recovery in service activity rather than a narrow surge in one niche. New orders rose at their fastest pace in three months, and the May reading was revised up from an initial estimate of 58.9, reinforcing the view that momentum was stronger than first thought.
Pranjul Bhandari, HSBC’s chief India economist, said the May reading showed expansion supported by a continued rise in new business and that external demand for Indian services rebounded after a sharp decline in April. That matters because the service sector’s strength was not driven only by domestic consumers. A recovery in overseas demand helped, even as international conditions remained uneven and hiring stayed cautious.
The composition of the expansion also offers a clearer view of what is and is not feeding through to the wider economy. Input cost inflation eased in May, reducing pressure on selling prices and improving the margin outlook for service firms that have faced strain from wages, logistics and imported inputs. For businesses in consumer-facing and business services, that is a helpful shift. For households, however, the stronger PMI has yet to translate into a clear, broad-based acceleration in jobs or spending.
Still, the data show a sector that has kept growing for a long time. India’s services PMI has stayed above the 50-point threshold for more than four years, underscoring how durable the expansion has been even through swings in global demand. May’s reading suggests that the engine is still turning over strongly, but the softer confidence reading and mixed export picture show the recovery is not yet evenly shared across the sector.
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