India’s services sector saw its fastest growth in three months this May, thanks to robust export demand and record employment gains, keeping the economy’s expansion momentum alive.
Key Highlights:
- Services PMI at 58.8:
The HSBC India Services PMI (seasonally adjusted) rose to 58.8 in May, up from 58.7 in April — well above the 50-mark, signaling sustained sector expansion.
- Record Employment Surge:
Companies ramped up hiring at the fastest pace on record to meet rising demand and export orders.
- Exports Driving Growth:
Strong overseas demand remains a critical growth engine for India’s services industry.
- Rising Cost Pressure:
Both input costs and output charges climbed above historical averages, hinting at inflationary pressures.
- GDP Expansion Stays Strong:
- India’s GDP grew 6.5% in FY25, powered by a 7.4% jump in the Jan-Mar quarter.
- The FY24 growth was even higher at 9.2%, beating RBI’s earlier forecasts.
- FY26 Outlook:
RBI expects 6.5% GDP growth this fiscal, supported by rural demand, public investments, and services exports.
Manufacturing Sector Shows Signs of Cooling:
- Manufacturing PMI dips to 57.6 — a three-month low — as growth in new orders and output softened slightly.
- The HSBC India Composite PMI (which combines manufacturing & services) eased marginally to 59.3 in May from 59.7 in April — still indicating healthy economic activity.
Logistics & Freight Takeaway:
- Rising services demand, especially from export-linked sectors, signals potential for increased freight and cargo movement.
- Record employment and public investment could boost infrastructure and supply chain activity in the coming quarters.
- Caution: Manufacturing slowdown could soften domestic logistics volumes temporarily.
