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India’s services sector activity growth eased further during the month of May but remained comfortably above the neutral mark of 50.0, highlighting a sharp upturn in output. Robust increases in new business intakes continued to underpin output growth across India's service economy.

According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index fell to 60.2 in May from 60.8 in April. It was 61.2 in March. Further, the HSBC India Composite PMI Output Index -- which measures both manufacturing and services -- also eased to 60.5 in May as against 61.5 in April. The report further noted that amid favourable economic and demand conditions along with successful advertising, new orders rose at a substantial pace but the slowest in the calendar year-to-date as fierce competition and extreme heat across the country dampened growth. 

However, new export orders improved substantially in May, with growth climbing to the fastest seen since the inception of the series in September 2014. On the inflation front, both input costs and output charges rose to greater extents. As per the report, expectations that marketing efforts will bear fruit, coupled with improved customer engagement, demand strength and buoyant economic conditions boosted business confidence among service providers. The overall level of positive sentiment climbed to an eight-month high.