India’s Services Engine Accelerates: May PMI Shows Strongest Expansion in Six Months

India’s services sector gained fresh momentum in May, with the HSBC India Services Business Activity Index rising to 59.8 from 58.8 in April, marking the strongest expansion since November 2025. Since a PMI reading above 50 indicates growth, the May figure shows that India’s services economy continues to expand at a strong pace, powered by domestic demand, new clients, higher business activity and improving export orders.

The services sector is the main engine of India’s modern economy. It includes information technology, finance, transport, hospitality, communication, healthcare, education, entertainment, professional services and consumer-facing businesses. When this sector expands, it reflects activity across both households and companies. The May PMI reading therefore signals confidence in urban consumption, business spending, digital services, travel, retail and enterprise demand.

A major strength in the latest survey was the rise in new business. Service providers reported stronger inflows of fresh work, with new orders growing at the fastest pace in six months. Reuters noted that demand was helped by areas such as e-commerce, entertainment and information technology, showing that India’s digital and consumer services ecosystem continues to pull the economy forward.

Export orders also recovered after weakness in April. DD News reported that international demand improved across several markets, including Australia, Canada, France, Germany, Hong Kong, Malaysia, the United Arab Emirates and the United Kingdom. This is important because India’s services exports are a major source of foreign exchange, especially through IT, business process services, consulting, finance, design, engineering and digital support.

The broader private sector also strengthened. The HSBC India Composite Output Index, which combines manufacturing and services activity, rose to 59.3 in May from 58.2 in April, reaching its highest level in six months. This means that both factories and service providers moved in the same positive direction, creating a more balanced picture of economic activity.

The cost picture also showed relief. Businesses continued to face higher expenses for food, fuel, gas, labour and raw materials, but the pace of input cost inflation eased to a four-month low. This gave companies more breathing room and reduced the pressure to pass rising costs to customers. Selling prices increased at the slowest pace since January and stayed broadly close to long-term averages.

Employment remained positive as service providers added staff to handle growing business requirements. DD News reported that job creation was the second-fastest recorded in nearly a year, although Reuters noted that fewer than 7% of surveyed firms reported fresh recruitment. This shows that hiring is improving, while the expansion still has room to become more broad-based across the sector.

Among the monitored categories, consumer services emerged as the strongest performer, leading growth in both output and new business. This points to steady demand from Indian households and urban consumers. Consumer services often respond quickly to changes in income, confidence and discretionary spending, so their strong performance suggests that India’s domestic market remains active.

The May PMI reading matters because it comes at a time when the global economy is facing uncertainty from geopolitical tensions, trade disruptions, energy costs and weak external demand. India’s services sector has shown the ability to absorb pressure through the strength of its internal market. Domestic demand continues to act as the anchor, while export demand adds an additional growth channel

Overall, the May services PMI presents a strong picture of India’s economy. Activity has accelerated, new business has improved, export orders have rebounded, hiring remains positive and inflation pressure has eased. For India, this is a valuable signal: the services sector is not merely growing; it is helping carry the broader economy through a period of global uncertainty. A strong services engine, supported by manufacturing recovery and steady domestic demand, gives India a firm base for sustained growth in the months ahead.