In May 2026, India’s services sector experienced significant acceleration, with the HSBC India Services Purchasing Managers’ Index (PMI) rising to 59.8, up from 58.8 in April. This marks the strongest expansion since November, driven by robust domestic demand and a rebound in international business.
Key Drivers of Acceleration
- Sectoral Demand: Strong performance in freight, digital solutions, e-commerce, IT, and entertainment bolstered new business inflows, outpacing the manufacturing sector.
- Export Recovery: International demand rebounded sharply after an April decline, with solid gains from markets including the UK, UAE, Germany, Australia, and Canada.
- Employment: Service providers accelerated hiring to manage rising workloads, marking the second-fastest job creation rate in nearly a year, particularly in consumer services.
- Inflation & Pricing: While firms faced higher costs for labor, fuel, and raw materials, output price inflation remained moderate as companies absorbed some costs to maintain competitiveness.
Broader Private Sector Performance
- Composite PMI: The HSBC India Composite PMI Output Index climbed to 59.3 (from 58.2 in April), reflecting a coordinated recovery across both services and manufacturing.
- Manufacturing vs. Services: While manufacturing PMI rose to 55.0, growth was primarily domestic-driven, with export orders trailing behind the services sector due to geopolitical trade friction.
IASPOINT Booster Facts
- PMI Definition: A survey-based indicator where >50 indicates expansion and <50 indicates contraction.
- Compilation: Compiled by S&P Global based on surveys of ~400 private service companies.
- Methodology: Manufacturing PMI is a composite of five weighted variables; Services PMI is a single-question diffusion index tracking business activity volume.
- Composite Weighting: The Composite Output Index is weighted based on the relative contributions of manufacturing and services to India’s total GDP.