An illutration with the Indian flag and the words 'economy' and 'growth'. For representational purposes.
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New Delhi: India's services sector growth rose to a two-month high of 58.5 in January, on faster expansion in new business intake and output, prompting service providers to hire additional staff, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose to a two-month high of 58.5 in January, from December's recent low of 58.0, mainly driven by demand buoyancy, new business gains and tech investment.
In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
"India's services PMI rose to 58.5 in January, up from 58.0 in December, signalling sustained momentum in the sector. Robust output growth was driven by a steady influx of new orders, including increased international demand from South and Southeast Asia," said Pranjul Bhandari, Chief India Economist at HSBC.
Service providers in India noted faster growth in new business intake and output. They were also more upbeat towards the outlook and hired additional staff, the survey noted.
According to the survey, new orders rose at the quickest pace in two months. The main source of new business gains was the domestic market, but international orders nevertheless rose solidly.
Survey participants remarked on new business gains from clients in Indonesia, Kenya, Malaysia, Oman, Qatar, Sri Lanka, Thailand and Vietnam.
Service providers in India were more upbeat towards the outlook.
"Business confidence climbed to a three-month high, supported by efficiency gains, effective marketing, and the acquisition of new clients. While input and output prices are rising, they remain fairly mild by historical standards," Bhandari added.
On the price front, there were quicker albeit still moderate increases in input costs and selling charges, the survey said.
Cost pressures were by far most intense in the Consumer Services category, while the strongest increase in output charges was noted in the Finance & Insurance sector. Meanwhile, during January, India's private sector witnessed quicker increases in new orders and output, which in turn supported job creation and strengthened business confidence.
The HSBC India Composite PMI Output Index rose from last December's 11-month low of 57.8 to 58.4 in January.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices.
Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.
"The composite PMI also strengthened in January, reflecting solid demand growth across both manufacturing and services," Bhandari said.
On the job front, after stagnating in December, private sector employment increased at the start of 2026. Slight rates of job creation were noted at manufacturing firms and their services counterparts, the survey said.