Job creation in services sector during May recorded strongest growth even as Purchasing Managers’ Index (PMI) was almost flat at 58.8, S&P Global reported on Wednesday.
Job creation in services sector during May recorded strongest growth even as Purchasing Managers’ Index (PMI) was almost flat at 58.8, S&P Global reported on Wednesday.
Services has maximum share in India’s Gross Value Added (GVA) with around 54 per cent.
According to Pranjul Bhandari, Chief India Economist at HSBC, services PMI was broadly in line with the steady readings from recent months.
“Strong international demand continued to fuel services activity, as evidenced by the new export business index’s uptick from April. To keep up with swelling demand, India’s service providers heavily increased staff recruitment. Indeed, the employment index rose to the highest reading ever recorded by this survey,” she said.
PMI is prepared on the basis of responses from purchasing managers of 400 companies. Index above 50 means expansion, while below 50 implies contraction. PMI in April was 58.7.
S&P Global highlighted that to accommodate for ongoing expansions in new business intakes, service providers continued to recruit additional staff. Almost 16 per cent of panel members reported higher payroll numbers, while 1 per cent indicated a fall. The resulting overall rate of job creation was the strongest in the history of the survey, it emphasised. However higher accretion in the manpower added to the cost.
“Price pressures continued to intensify with input prices and charged prices both rising last month,” Bhandari said. Some companies also cited greater outlays on cooking oil, material and meat. The overall rate of inflation edged above the series average and was the highest since the start of the current calendar year.
Likewise, services charges in India rose to a greater degree halfway through the first fiscal quarter. The rate of inflation was the joint-strongest since November 2024 and historically marked.
The report mentioned that new orders rose at a sharp pace that was largely aligned with those registered from February to April.
Advertising, demand strength and repeat orders from existing clients were some of the reasons panellists gave for the upturn in sales. Notably, companies observed a near-record improvement in international demand for their services during May.
“Over the course of the survey’s 19-and-a-half-year history, faster increases in new export orders were only recorded in May and June 2024. When citing sources of growth, firms mentioned Asia, Europe and North America in particular,” it said.
May data showed an easing of capacity pressures at services companies, as outstanding business increased at a slower pace. The rate of accumulation was marginal and the weakest in eight months.
The slower fall in backlogs of work was a result of jobs growth, anecdotal evidence showed. Talking about business sentiments, the report said that there was a recovery with the overall level of confidence rising from April’s 23-month low.
“Upgraded forecasts stemmed from expectations that greater staffing capacity, expanded clientele and marketing initiatives will support activity growth in the year ahead,” it said.
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Published on June 4, 2025
