India’s services sector recorded stronger growth in May, supported by rising demand, increased business activity and a rebound in export orders, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) survey.
The seasonally adjusted HSBC India Services Business Activity Index rose to 59.8 in May from 58.8 in April, indicating the strongest pace of expansion in the sector since November last year. A reading above 50 signals growth in activity.
The survey attributed the improvement to healthy economic conditions and new client acquisitions, which helped boost overall output across the services sector.
The broader private sector economy also witnessed stronger growth during the month. The HSBC India Composite Output Index, which combines manufacturing and services activity, increased from 58.2 in April to 59.3 in May.
New business inflows to service providers expanded at the fastest pace in six months, outpacing growth in the manufacturing sector even as both segments registered stronger activity.
The report noted that input costs continued to rise due to higher expenses related to food, fuel, gas, labour and raw materials. However, the pace of cost inflation eased to a four-month low, reducing pressure on businesses to raise prices.
As a result, selling prices increased at the slowest pace since January and remained broadly in line with historical averages.
Commenting on the survey findings, Pranjul Bhandari, Chief India Economist at HSBC, said business activity in the services sector expanded in May on the back of continued growth in new orders.
She noted that international demand for Indian services also improved, recovering from a sharp decline recorded in April. According to the survey, export orders increased across several markets, including Australia, Canada, France, Germany, Hong Kong, Malaysia, the United Arab Emirates and the United Kingdom.
To meet growing business requirements, service providers continued to add staff during the month. Employment growth remained strong and was the second-fastest recorded in nearly a year, although only a small proportion of firms reported fresh hiring.
Among the monitored segments, consumer services emerged as the strongest-performing category, leading growth in both output and new business. The segment also recorded the highest increase in input costs and selling prices.
-ANI
