India services activity hits 2-month high in January as hiring resumes, costs rise: PMI

India’s services sector activity picked up in January, supported by stronger demand, a rebound in hiring and improving business confidence, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI).

The seasonally adjusted PMI business activity index climbed to a two-month high of 58.5 in January from 58.0 in December.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

Pranjul Bhandari, chief India economist at HSBC, said India’s services PMI signalled “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,” Bhandari said.

According to the survey, new orders rose at the fastest pace in two months after slipping to an 11-month low at the end of 2025.

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.

Finance and insurance led growth in both output and new orders, even as it was the only segment to record slower momentum compared with December.

International demand also strengthened, with firms reporting new business from countries including Indonesia, Kenya, Malaysia, Oman, Qatar, Sri Lanka, Thailand and Vietnam.

Rising workloads prompted service providers to resume hiring in January, though job creation remained marginal as most firms kept staffing levels unchanged amid adequate capacity.

On the price front, companies reported higher costs for items such as eggs, electronic goods, meat, paper, parts and vegetables.

Input costs rose at their fastest pace since September, while output charges increased at a three-month high, though both remained mild by historical standards.

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.