India’s Private Sector Fires on All Cylinders in May: Services Lead, Jobs Surge, and Confidence Returns

May 2025 was a watershed moment in the economic story of India, with the nation's private sector putting the pedal to the metal—fueled by surging services growth, stable manufacturing, and excellent job generation.

As reported by S&P Global in its latest HSBC Flash India Composite PMI Output Index, activity soared to a 13-month high of 61.2 from 59.7 in April. This increase marks the fastest month-on-month increase since April 2024, and it's the services sector that's mainly responsible for this economic boost.

While industrial production growth slowed modestly—its PMI remaining unchanged at 58.3—India's service industry was the showstopper. They posted the biggest jump in production in more than a year, with a boost coming from a spurt in domestic as well as foreign demand. Industries such as IT, financial services, and logistics registered particularly robust momentum, reflecting that India's service economy is the nerve centre of private sector growth.

Hiring Reaches Record High

One of the most encouraging takeaways? Job creation. Both full- and part-time positions were added at a record pace not seen since 2005. Service providers led this hiring spree, while manufacturers continued steady recruitment. This surge in employment reflects companies’ growing confidence in maintaining—and scaling—their operations.

Inflation Rears Its Head

With growth, however, comes inflation. Input and output prices saw their fastest increase since late 2024, with manufacturers experiencing the sharpest rise in product prices in over 11 years. Still, strong demand allowed businesses to pass on these costs without dampening sales—a sign of resilience in consumer and enterprise sentiment alike.

Exports Add Extra Fuel

Exports played a key role this month, especially in the services domain. International sales rose at the fastest rate in nearly a year, offsetting slower growth among goods producers. From tech services to consulting, India’s export engine appears to be back in high gear.

Outlook: Cautious Optimism

Despite challenges like inflation and geopolitical tensions, businesses are regaining confidence. With increased tech adoption, capacity expansion, and a bullish job market, the private sector looks well-positioned for a strong 2025.

If May is any indication, India’s economy isn’t just recovering—it’s ready to lead.