With strong demand, private sector businesses did well in May, as Purchasing Managers’ Index (PMI) for services rose to 59.8 as against 58.8 of April, S&P Global reported on Wednesday

“India’s services PMI signalled an expansion in business activity in May, supported by a continued rise in new business. External demand for India provided services also grew at a faster pace, rebounding after a sharp decline in April. Input cost inflation eased, which in turn reduced pressure on selling prices,” said Pranjul Bhandari, Chief India Economist at HSBC. PMI is derived from responses of 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services. A reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.

S&P Global attributed strengthening demand for services such as freight, digital solutions, e-commerce, entertainment and IT for higher PMI. These also have positive impact on payroll numbers. “The overall rate of job creation was solid and the second-fastest in just under a year (behind April), but fewer than 7 per cent of panellists signalled greater hiring and the vast majority indicated no change in headcounts,” it said.

“Although cost pressures remained historically high across India’s service economy, they receded to their lowest in four months, which supported a moderate increase in selling prices that was the softest since January,” it added.

Further, there was a negligible uptick in outstanding business volumes at Indian service providers during May, as signalled by the respective seasonally adjusted index registering only fractionally above the neutral mark of 50.0. Regarding the 12-month outlook for business activity, services firms collectively expressed optimism. They generally expect demand conditions to remain favourable and therefore support output.

That said, “the overall level of confidence slipped to a three-month low and was below the historical trend,” S&P Global said. Granular data showed that consumer services remained the brightest spot, as growth of new business intakes and output here outpaced those seen in the other three categories. Consumer services also topped the inflation rankings, recording the strongest increases in both input costs and output charges out of all four monitored sub-sectors,” it added.

Published on June 3, 2026