India’s services sector maintained robust momentum in January, driven by strong domestic and regional demand, according to the latest HSBC India Services Purchasing Managers Index (PMI) data. The January reading rose to 58.5 from 58.0 in December, marking the 54th consecutive month of expansion and highlighting the continued strength of the services-driven engine of economic growth. Growth in new business accelerated at the fastest pace since November, supported by higher orders from South and Southeast Asian markets. Companies reported that increased online presence and proactive marketing campaigns played a key role in attracting new business, while export orders also showed moderate improvement during the month.
Despite the overall expansion, employment growth remained subdued, with job creation barely above stagnation levels. Additionally, input costs rose, prompting some companies to increase service charges, reflecting modest inflationary pressures. Nevertheless, overall business sentiment strengthened, reaching a three-month high as firms anticipated improved efficiency and further new business opportunities.
The positive performance in services also contributed to broader economic activity. The composite India PMI, which combines manufacturing and services sector data, rose to 58.4 in January from 57.8 in December. The uptick was fueled by stronger demand across both sectors, with manufacturing activity recording modest improvement, further supporting private sector expansion. The PMI data suggest that the Indian economy began 2026 on a solid foundation, benefiting from sustained demand recovery and heightened business confidence.
Looking ahead, maintaining momentum will require close monitoring of employment trends and input costs. Policymakers and businesses alike will need to focus on sustaining efficiency gains, encouraging investment, and balancing inflationary pressures to ensure continued robust economic growth. Overall, the January PMI readings reinforce India’s position as a fast-growing economy with resilient service-driven activity, reflecting optimism among businesses and strong underlying demand.
