India's Services Sector Sees Unprecedented Hiring as May Growth Remains Strong

India's services sector maintained its strong growth in May, driven by a rebound in foreign demand and all-time high recruitment activity, based on the latest HSBC survey.

Seasonally adjusted HSBC India Services Purchasing Managers' Index (PMI) stood at 58.8 for the month of May 2025, just slightly above April's 58.7. This reflects a consistent and intense rate of expansion in business activity. The PMI is based on a monthly survey where companies are asked to compare the level of activity with last month.

The upbeat momentum was based on favourable demand conditions, gains in new clients, and higher strength in the workforce, based on the survey.

A highlight of recent data was the record surge in foreign demand. May witnessed one of the most rapid jumps in export orders in the 19-and-a-half-year history of the survey — second only to gains experienced in May and June 2024. Firms specifically attributed higher interest from customers in Asia, Europe, and North America as main drivers of growth.

New orders for businesses increased in a similar manner to the trend from February to April. In response, service providers increased hiring efforts, resulting in a high employment index since surveys started.

But increased demand also brought about higher cost pressures. Input costs and prices for output rose at rates higher than their historical averages, indicating increasing inflationary pressures.

Terming the findings, HSBC Chief India Economist Pranjul Bhandari stated: "India saw a 58.8 services PMI in May 2025, in line with the stable readings over the past few months. International demand remained strong and drove services activity, indicated by the rise in the new export business index from April."

"To maintain pace with surging demand, India's service providers recruited heavily. In fact, the employment index posted its all-time best reading through this survey. In contrast, price pressures remained abated with input costs and charged prices both increasing last month," she continued.