India's services sector growth hits 6-month high in May on new orders, softer rise in cost burdens
Business 03 Jun, 2026

India's services sector growth hits 6-month high in May on new orders, softer rise in cost burdens

Business To Business, New Delhi, 3rd June, 2026:  India's services sector recorded a strong performance in May, with the HSBC India Services PMI Business Activity Index rising to 59.8, up from 58.8 in April. This marks the fastest expansion in six months and indicates robust growth in service-sector activity.
What the PMI reading means
The Purchasing Managers' Index (PMI) is a widely used indicator of business conditions:

  • A reading above 50 indicates expansion.
  • A reading below 50 indicates contraction.
  • The higher the number above 50, the stronger the pace of growth.
At 59.8, the May reading points to a significant acceleration in activity across India's services sector.
Drivers of growth
According to the survey, the increase was supported by:
  • Strong domestic and international demand.
  • New client acquisitions.
  • Higher inflows of new business.
  • Continued expansion in output and employment.
Companies reported that favorable market conditions and successful efforts to attract new customers contributed to the improvement.
Why the services sector matters
The services sector is a major pillar of the Indian economy, encompassing industries such as:
  • Information technology and software services.
  • Financial services and banking.
  • Telecommunications.
  • Hospitality and tourism.
  • Healthcare.
  • Transportation and logistics.
  • Professional and business services.
The sector contributes more than half of India's economic output and is a significant source of employment and export earnings.
Economic implications
A strong services PMI suggests:
  • Continued momentum in economic growth.
  • Healthy business confidence.
  • Potential support for job creation.
  • Sustained consumer and corporate demand.
The strong May reading follows a period in which India's economy has remained one of the fastest-growing among major economies, with domestic demand continuing to be a key growth driver.
Overall, the rise to 59.8 indicates that India's services sector entered the middle of 2026 with considerable momentum, supported by robust demand conditions and expanding business activity.

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