India's services sector activity surged to a six-month high in May, driven by robust domestic demand, according to the latest Purchasing Managers' Index (PMI) data released on Wednesday.
PMI Rises to 59.8
The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 58.8 in April to 59.8 in May, marking the strongest expansion since November 2025. The index has remained above the 50-point threshold, which separates expansion from contraction, for the 34th consecutive month.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said, “The Indian service sector continued to perform strongly in May, with business activity expanding at the fastest pace in six months. Demand strength was a key factor, with new business inflows rising sharply.”
Key Drivers of Growth
The upturn was primarily fueled by strong domestic demand, as new business orders increased at the fastest rate in six months. Companies reported improved market conditions and successful marketing efforts. However, new export orders grew at a softer pace compared to April.
On the employment front, service providers continued to hire additional staff, though the rate of job creation eased slightly from the previous month. The overall sentiment remained positive, with firms expressing confidence in future growth prospects.
Input Costs and Pricing
Input cost inflation moderated in May, with the rate of increase easing to a three-month low. Despite this, companies passed on some of the cost burdens to customers by raising selling prices. The rate of output price inflation was modest but slightly higher than in April.
De Lima added, “The combination of strong demand, improving capacity, and moderate cost pressures bodes well for the sector. However, competition remained intense, and some firms noted margin pressures.”
Composite PMI Also Rises
The S&P Global India Composite PMI Output Index, which combines manufacturing and services, rose to 60.8 in May from 60.3 in April, indicating the strongest expansion in private sector output in six months. Manufacturing PMI, released earlier, stood at 58.8 in May, slightly down from 59.1 in April but still indicating strong growth.
The latest data aligns with expectations of sustained economic momentum in India, supported by domestic demand and resilient business conditions. The services sector remains a key driver of overall economic activity.
