India’s services sector continued to expand, but at a slower pace in May 2025. The Services PMI rose marginally to 58.8 from April’s 58.7, according to the HSBC India Services PMI report released on Wednesday.

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 with April’s reading of 58.7 and therefore signaled another sharp rate of expansion.

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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.

As per 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. 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.

To accommodate the sustained rise in new business, service providers significantly increased hiring, marking the strongest rate of job creation since the survey began.

Around 16 per cent of firms reported adding to their workforce, while only 1 per cent noted a reduction, reflecting solid confidence in future demand. Other trends, such as rising input cost inflation, also aligned with patterns observed in the manufacturing sector during the same period.

“To keep up with swelling demand, India’s service providers heavily increased staff recruitment. Indeed, the employment index rose to the highest reading ever recorded by this survey,” Chief Economist at HSBC, Pranjul Bhandari, said.

“Meanwhile, price pressures continued to intensify with input prices and charged prices both rising last month”, she added.

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.