India’s services sector recorded its strongest growth in ten months during June, supported by robust domestic demand, rising international sales, and continued job creation, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) survey released on Thursday.
The seasonally adjusted Services PMI Business Activity Index climbed to 60.4 in June from 58.8 in May, signaling a sharp acceleration in activity. A reading above 50 reflects expansion, while a score below that threshold signals contraction.
According to Pranjul Bhandari, Chief India Economist at HSBC, the June rise was primarily driven by a sharp increase in new domestic orders. “The Services PMI business activity index hit a ten-month high, led by a sharp rise in new domestic orders. New export orders also expanded, albeit at a softer pace. Margins improved, as the rise in input costs was below that seen for output charges,” she noted.
Strong Demand Boosts New Orders and Exports
New business inflows rose at the fastest pace since August 2024, with service providers benefiting from robust domestic consumption. Export demand also improved, particularly from Asian, Middle Eastern, and US markets, as noted by participating firms.
Sustained Job Growth
The sector’s expansion had a positive effect on employment. June marked the 37th consecutive month of job growth, with the rate of hiring exceeding its long-term average, though slightly slower than May’s peak. This reflects firms’ confidence in sustained demand.
Inflationary Pressures Ease
Input cost inflation remained moderate, allowing service providers to manage margins better. The survey noted that the consumer services category saw the highest cost pressures, while finance and insurance companies registered the fastest increase in output charges.
Moderating Business Confidence
Despite the strong performance, future expectations showed a slight decline. Around 18% of surveyed firms forecast growth in activity over the coming year, the lowest level of optimism since mid-2022. “Service providers remained optimistic about future growth, though their confidence faded a tad,” Bhandari added.
Composite PMI Sees 14-Month Peak
The HSBC India Composite PMI Output Index—which includes both manufacturing and services sectors—rose to 61 in June, up from 59.3 in May, marking the fastest expansion in over a year.
The survey also noted that prices charged by private sector firms rose at the slowest rate in three months, while input cost pressures eased to the weakest level since August 2024. These trends were seen across both manufacturing and service segments.
The HSBC India Services PMI is compiled by S&P Global based on responses from around 400 companies in the services sector. The results indicate a solid and broad-based recovery in India’s private sector, led by resilient domestic demand and improving export conditions.