Indian Economy News

India services activity hits three-month high in May on strong export growth; employment rises by record

India's services sector output reached a three-month high in May, driven by strong export growth. The seasonally adjusted HSBC India Services PMI Business Activity Index, compiled by S&P Global, increased to 58.8 in May from 58.7 in April and 58.5 in March, remaining well above the 50-mark that indicates expansion. Employment rose by a record as companies scaled up operations to match sustained growth in sales. Price indicators pointed to stronger inflation in input costs and output charges, both rising above their historical averages. India's services sector, a pillar of its economy, accounts for more than half of the country's gross domestic product. India's GDP expanded by 6.5% in FY25, bolstered by a 7.4% growth in the January-March quarter. The economy grew by 9.2% in FY24, driven by a 7.8% expansion in the January-March quarter, surpassing the Reserve Bank of India's 7% forecast. The RBI projects 6.5% GDP growth in FY26, driven by rural demand, public investment, and strong services exports.
However, India's manufacturing sector activity dropped to a three-month low in May as growth in new orders and output softened. The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April and 58.1 in March. The HSBC India Composite PMI Output Index stood at 59.3 in May, slipping slightly from 59.7 in April, indicating a continued sharp expansion in overall activity. The downward movement in the headline index reflected softer growth of factory production as services activity rose at a quicker pace.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.