Date: 3 June 2026

Entity / Source: HSBC India / S&P Global

Headline: HSBC India Services PMI® Rises to 59.8 in May, Signaling Strongest Expansion Since November 2025

Key Data & Developments:

  • Services PMI: Rose to 59.8 in May from 58.8 in April, marking the strongest expansion since November 2025 and continuing recovery from March's slowdown
  • New Business Growth: Accelerated to a six-month high, driven by strengthened demand for freight, digital solutions, e-commerce, entertainment, and IT services
  • External Demand: New export business rose but remained below the 2025 calendar year average, with solid gains from Australia, Canada, France, Germany, Hong Kong, Malaysia, UAE, and UK
  • Inflation Trends: Input cost inflation eased to a four-month low though remained above historical trend, with firms reporting higher costs for food, fuel, gas, labor, and materials
  • Selling Prices: Increased at the softest rate since January (four-month low), broadly matching long-run average, with only 5% of panelists hiking fees
  • Employment: Posted solid job creation at the second-fastest pace in nearly a year (behind April), though fewer than 7% of panelists signaled greater hiring
  • Sector Performance: Consumer services remained the brightest spot, outpacing other three categories in new business and output growth, while also recording the strongest input cost and output charge inflation
  • Composite PMI: Output Index rose to 59.3 in May from 58.2 in April, with service providers outperforming manufacturers in new order growth

Macro / Structural Takeaways:

  • Growth Momentum: Services sector shows accelerating expansion momentum with PMI at 59.8, indicating robust domestic demand conditions and recovery from previous slowdown
  • Inflation Trajectory: While input costs remain elevated historically, the easing trend to four-month low suggests moderating cost pressures, though consumer services continue to show highest inflation
  • Employment Stability: Sustained job creation at solid pace indicates capacity expansion to meet growing demand, though majority of firms maintained stable headcounts

Equity Market Implications:

  • Beneficiary Sectors: Consumer services, IT/digital solutions, e-commerce, logistics/freight, and entertainment sectors show strongest growth momentum and pricing power
  • Margin Outlook: Easing input cost inflation coupled with moderated selling price increases suggests potential margin stabilization for services companies
  • Domestic vs Export Tilt: Strong domestic demand continues to drive growth, though external demand shows solid expansion with diversified geographic exposure