India’s Services Sector Powers Ahead in May; Hiring Hits Record High

India’s services sector continued its robust performance in May 2025, posting strong growth in business activity, hiring, and export demand. The HSBC India Services PMI Business Activity Index inched up to 58.8 from April’s 58.7, signalling another month of sharp expansion. A PMI reading above 50 indicates growth, while below 50 reflects contraction.

Driven by solid domestic demand, effective advertising strategies, and repeat orders from loyal customers, businesses across finance, transport, communication, and real estate reported a steady stream of new clients and a notable increase in international 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.

The growth in demand also sparked a hiring surge across the sector. Nearly 16% of surveyed firms added new employees—the highest rate of job creation recorded since the survey began—while just 1% reported staff reductions. Companies cited expanding business pipelines and growing customer bases as key drivers behind the workforce expansion.

However, the hiring spree, alongside rising costs for inputs like cooking oil, meat, and raw materials, led to increased operating expenses. Firms reported a moderate rise in output prices, reflecting efforts to pass on some of the cost pressures to consumers.

Despite inflationary concerns, business sentiment remained upbeat. Firms expressed confidence that larger client bases, better staffing, and targeted marketing campaigns would continue to support growth in the months ahead.

Meanwhile, the HSBC India Composite PMI Output Index—which combines data from both manufacturing and services—stood at 59.3 in May, slightly down from April’s 59.7. The dip was attributed to a mild slowdown in factory activity, even as services gained momentum.

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