India's services sector grows at fastest pace in 6 months

India's services sector grows at fastest pace in 6 months

India's services sector has witnessed its fastest growth in six months, largely due to a surge in domestic demand. The growth was particularly strong in e-commerce, entertainment, and IT industries.

The HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, jumped to 59.8 in May from April's 58.8.

A reading above 50 indicates growth and India's services PMI has remained above that level since mid-2021, indicating the sector's resilience and expansion despite global challenges.

Domestic demand drives growth, export orders improve slightly

The rise in new business, a key indicator of demand, was driven by e-commerce, entertainment, and IT.

Export orders also saw a slight increase after hitting a five-month low in April amid uncertainty over a US trade deal.

However, hiring remained subdued with less than 7% of firms surveyed reporting new recruitment.

This indicates that the overall growth is yet to translate into widespread job creation across the services sector.

Input cost inflation eases, but business outlook remains cautious

On the price front, input cost inflation eased for the second month from a 45-month high in March.

This provided some relief to firms as the prices charged sub-index fell to a four-month low.

However, the business outlook index slipped to 61.9 from 62.3 - its second consecutive monthly decline and below its historical average - indicating growing caution among firms about future economic conditions.