Key Points

The index, which is based on a monthly survey of around 400 service companies, signals expansion when the reading is above 50 and contraction when it is below that mark.

It said "Registering 58.8 in May, the seasonally adjusted HSBC India Services PMI Business Activity Index, based on a single question asking how the level of business activity compares with the situation the month before, was broadly in line April's reading of 58.7 and therefore signaled another sharp rate of expansion".

The latest data showed that India's services activity remained broadly steady, with business growth supported by strong demand, new client wins, and higher staffing capacity.

According to the report, the services sector maintained the sharp pace of growth seen over the past three months, reflecting the sector's resilience and ongoing economic momentum.

One of the standout findings of the report was the sharp rise in international demand. In fact, survey participants reported one of the strongest improvements in export orders in the entire 19-and-a-half-year history of the PMI survey.

The pace of new export business growth recorded in May was only surpassed once before, in June 2024. Firms cited strong demand from key global markets such as Asia, Europe, and North America as drivers of this performance.

New orders, both domestic and international, continued to rise sharply. Companies attributed the increase to strong advertising efforts, repeat orders from existing clients, and the overall strength in demand.

This consistent rise in sales led many businesses to expand their workforce. As a result, employment growth in the services sector reached a new record in May, as firms boosted staffing to meet rising workloads.

HSBC said "Ongoing improvements in demand for Indian goods and services led to survey-record increases in jobs across the two sectors. Hence, aggregate employment expanded at an unprecedented pace".

Business confidence also showed signs of recovery after dipping to a 23-month low in April. The report noted that improved sentiment stemmed from expectations of better staffing, an expanding client base, and marketing efforts that are likely to support further growth in the year ahead.

Overall, the May Services PMI report highlights the continued strength of India's services economy, with steady output growth, record hiring, and improving global demand provides a positive outlook for the months to come.

- ANI