India's Services Sector Booms in May; Job Creation Hits All-Time High Amid Strong Economic Tailwinds

News18

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IPOs worth Rs 1.4 lakh crore are in the pipeline for FY25, spanning sectors from infrastructure to consumer tech—pointing to growing investor appetite and corporate confidence
India's services sector surged ahead in May this year, maintaining its powerful growth momentum and generating jobs at a record pace—signalling resilience in one of the country's key economic engines.
According to the HSBC India Services Purchasing Managers' Index (PMI), business activity climbed to 58.8 in May from 58.7 in April, marking nearly three years of uninterrupted expansion. This steady growth was accompanied by the highest rate of job creation since the survey began in 2005, fuelled by robust domestic demand and a sharp rise in international orders.
The sustained services growth adds to a series of economic indicators positioning India for a historic leap in global rankings. India has surpassed Japan to become the world's fourth-largest economy by nominal GDP and may surpass Germany by 2027, reflecting rising investor confidence and a resilient domestic market.
May's services performance was underpinned by gains across customer-facing sectors like finance, business services, information technology, and real estate. New export orders saw their fastest rise in nearly 20 years, showcasing India's increasing integration with the global services economy. Companies reported improved demand conditions and confidence in future business prospects, prompting stronger hiring across the board.
'Activity in India's services sector remains resilient, with new business expanding at a sharp pace and firms hiring at the fastest rate on record," HSBC economist Maitreyi Das noted in the PMI report.
India's broader macroeconomic environment is also helping drive growth. Morgan Stanley's global chief economist Seth Carpenter recently said India's outlook remains 'solid", supported by sustained capital formation, government infrastructure spending, and a structurally low inflation environment anchored by the Reserve Bank of India's policy stance.
Business Standard reported that, adding to the momentum, the government has relaxed key provisions of the Special Economic Zones (SEZ) Act to encourage domestic production of semiconductors and electronics components—sectors deemed vital for technological self-sufficiency.
The government's policy push has yielded tangible results at the grassroots level. India surpassed its procurement targets from Micro and Small Enterprises (MSEs) in FY24, fulfilling its mandate to source 25 per cent of public procurement from the sector—a key milestone for inclusive growth—the Economic Times reported.
Simultaneously, foreign direct investment remains robust, with India attracting over $600 billion over the last decade, signalling long-term global confidence in its regulatory environment and economic direction.
Capital markets are mirroring this optimism. The Financial Express reported that IPOs worth Rs 1.4 lakh crore are in the pipeline for FY25, spanning sectors from infrastructure to consumer tech—pointing to growing investor appetite and corporate confidence.
With the services sector firing on all cylinders, supportive policies taking shape, and investor sentiment holding firm, India appears poised not only to meet but potentially exceed current growth projections. As the economy scales new heights, its success story is increasingly anchored in a services sector that continues to outperform, evolve, and employ at record levels—providing a solid foundation for India's next global leap.
First Published:
June 05, 2025, 13:09 IST