India’s services sector activity rose to a three-month high in May 2025, buoyed by strong international demand and a historic surge in employment, according to a private sector survey released on Wednesday.

The HSBC India Services Purchasing Managers’ Index (PMI) Business Activity Index edged up to 58.8 in May from 58.7 in April, marking the second consecutive monthly increase. A reading above 50 indicates expansion, while below 50 signals contraction.

A notable driver of this growth was the sharp rise in exports. “Survey participants reported one of the strongest improvements in international demand in 19-and-a-half years of data collection,” the report said, reflecting a substantial uptick in new business from overseas.

The month also saw a record increase in hiring, with services firms stepping up recruitment to meet swelling demand. “To keep up with swelling demand, India’s service providers heavily increased staff recruitment,” said Pranjul Bhandari, Chief India Economist at HSBC. “Indeed, the employment index rose to the highest reading ever recorded by this survey.”

Despite the growth momentum, rising input costs and output charges signaled continued inflationary pressures for businesses.

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This resilience in services offers a much-needed counterbalance to the manufacturing sector, which saw its PMI dip to a three-month low in May due to rising costs and geopolitical tensions following the India-Pakistan conflict.

The sustained momentum in services—especially export-driven industries—offers optimism for India’s economic stability amid global uncertainties.

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