HSBC India Services PMI eases in June as domestic demand weakens, though exports remain resilient and inflationary pressures continue to soften.
Key Highlights:
- India’s Services PMI fell to 57.4 in June from 59.8 in May.
- Growth remained above the 50-mark but slowed to a 17-month low.
- Domestic demand weakened, while export orders rose to a three-month high.
- Hiring remained largely stagnant as firms turned cautious.
- Composite PMI also slipped to 57.1, reflecting slower private sector growth.
New Delhi, July 3: India’s services sector lost momentum in June, with business activity slowing to its weakest pace in 17 months as softer domestic demand and cautious customer spending weighed on growth, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) survey compiled by S&P Global.
The seasonally adjusted HSBC India Services PMI Business Activity Index declined to 57.4 in June from 59.8 in May. Although the index remained comfortably above the 50-point mark, indicating continued expansion, it reflected the slowest growth since early 2025.
The survey found that several service providers faced difficult market conditions and weaker client interest, leading to slower sales growth. New business inflows expanded at their weakest pace in more than two-and-a-half years, suggesting that demand has started to moderate after months of strong performance.
HSBC Chief India Economist Pranjul Bhandari said the services sector continues to grow but has clearly lost momentum due to softer domestic demand. She noted that businesses are facing more challenging market conditions, especially within India.
Despite weaker domestic demand, overseas business remained a bright spot. Export orders recorded their strongest increase in three months, with companies reporting healthy demand from customers in countries including Australia, Germany, Canada, Singapore, the UAE, the US and several other international markets.
Inflationary pressures also continued to ease during June. Both input costs and prices charged by businesses rose at slower rates, with cost inflation falling to its weakest level since November 2025. The moderation was partly attributed to easing geopolitical disruptions in the Middle East, which helped reduce supply-side pressures.
Employment growth also slowed. Many companies indicated that their current workforce was sufficient to meet existing demand, resulting in limited hiring during the month. Business confidence regarding the year ahead remained positive but slipped to a five-month low as companies became more cautious about future growth prospects.
The broader HSBC India Composite PMI Output Index, which combines manufacturing and services activity, also fell to 57.1 from 59.3 in May. The data pointed to slower growth across India’s private sector, with softer increases in output, new orders, employment and overall business activity.
While the latest survey indicates that India’s economy continues to expand, the moderation in both manufacturing and services suggests businesses are entering the second half of the year with greater caution amid evolving domestic and global economic conditions.
