According to data released by the National Statistics Office (NSO), 16 of the 19 service sub-sectors covered by the Index of Services Production (ISP) recorded year-on-year growth in May 2026. The accommodation and food services sector registered the highest growth of 27.4 per cent, with its index rising to 148.9 in May 2026 from 116.9 a year earlier. As reported by Business Standard, this strong performance demonstrates robust growth across the majority of India's service economy during the month, with the ministry noting that 8 out of the 19 sub-sectors recorded double-digit growth during May 2026 compared with May 2025. The government released the second sub-sectoral trial ISP on July 29, 2026, showing that except for air transport, post and courier, and information and broadcasting, all categories recorded positive growth on an annual basis.
Real estate recorded growth of 17.7 per cent, followed by retail trade at 13.3 per cent, banking at 12.1 per cent and telecommunications at 11.8 per cent. According to MoSPI data, eight of the 19 sub-sectors recorded double-digit growth during the month. The accommodation and food services sector's exceptional performance of 27.4 per cent growth significantly outpaced other major sectors, indicating strong consumer demand in these areas. Other sectors posting double-digit growth included warehousing and support activities for transportation at 11.5 per cent, professional, scientific and technical services including research and development at 11 per cent, and information technology and computer-related services at 10.3 per cent. The latest figures mark the second monthly reading under India's newly introduced Index of Services Production, which was launched earlier this year to provide a high-frequency gauge of activity in the country's formal services economy.
Accommodation and food services growth moderated to 27.4 per cent in May from 37.2 per cent in April, while real estate growth eased to 17.7 per cent from 27.7 per cent during the same period. Retail trade growth also moderated sharply to 13.3 per cent from 30.8 per cent a month earlier, reflecting a normalisation after the strong expansion recorded in March and April. This moderation across consumer-facing activities indicates a natural cooling of demand following the exceptional growth witnessed earlier in the year. The data showed that 16 of the 19 services sub-sectors recorded positive annual growth during the month, with eight sectors posting double-digit expansion, indicating that growth remained broad-based despite moderation in several consumer-facing activities. The sharpest loss of momentum came in administrative and support services, where growth slowed to 5 per cent from 28.7 per cent, while wholesale trade slowed to 3.7 per cent from 15.3 per cent.
Transport-related activities presented a mixed picture with road transport growing 4.4 per cent, rail transport expanding 3.4 per cent, and water transport rising 5.6 per cent. In contrast, air transport contracted 2.8 per cent, though this represented an improvement from the 13.9 per cent decline in April. Railway transport turned positive, rising 3.4 per cent after a 0.4 per cent decline in April, showing resilience in rail transport services. Warehousing and transport support services continued to record robust double-digit growth of 11.5 per cent, suggesting resilient logistics demand despite weakness in aviation. The insurance services recorded growth of 2.7 per cent, and arts, entertainment and recreation services grew 1.6 per cent. As reported by PTI, the ministry stated that moderate growth was recorded in several other segments, with these sectors showing steady but more measured expansion across the services economy. Compared with the inaugural April reading, growth moderated across several sectors, though the expansion remained widespread.
Three sub-sectors contracted during the month. According to MoSPI data, information and broadcasting declined 7.6 per cent, air transport fell 2.8 per cent, and postal and courier services contracted 1 per cent. These contractions represent the only negative performance among the 19 service sub-sectors tracked by the ISP in May 2026, with the ministry noting that these declines occurred despite the overall positive trend across the services sector. The information and broadcasting decline of 7.6 per cent was the steepest fall among all sub-sectors, highlighting specific challenges in this sector during the month. However, postal and courier services, which grew 3.3 per cent in April, contracted 1 per cent in May, while information and broadcasting swung from 2.5 per cent growth to a 7.6 per cent contraction. According to D K Srivastava, chief policy advisor at EY India, the weighted growth of the 19 sectors eased to 9.8 per cent in May from 20.8 per cent in April, though there are clear indications of robust growth momentum for Q1 FY27 with services ISP showing an average growth of 15.3 per cent for the first two months of the quarter.
