India Services PMI hits 11-month high in July on strong export demand

Composite PMI Output Index rose to 61.1 in July from 61.0 in June, its fastest pace since April 2024; but hiring growth weakens

India’s services sector continued its strong run in July, with the HSBC India Services Purchasing Managers’ Index (PMI) climbing to an 11-month high of 60.5, up slightly from 60.4 in June, according to S&P Global data released on Tuesday.

  

Survey respondents cited strong advertising campaigns, new client onboarding, and solid demand as the primary drivers of growth. Export orders improved, with Indian firms securing contracts from Asia, Canada, Europe, the UAE, and the US. Sectorally, finance and insurance led growth, while real estate and business services lagged. 

Hiring slows despite demand surge

Despite healthy order books, employment growth eased to its weakest pace in 15 months, with fewer than 2 per cent of surveyed companies adding staff in July.

 

 

“At 60.5, the services PMI indicated a strong growth momentum, led by a pick-up in new export orders. Future optimism rose but remained below 1H25 levels,” said HSBC's Chief India Economist Pranjul Bhandari. 

Price pressures intensify

The report noted that input costs and output charges were rising at a faster pace than in June, reflecting higher food, freight, and labour expenses.

 

Manufacturing at 16-month high

Meanwhile, manufacturing activity gathered momentum, with the HSBC India Manufacturing PMI climbing to a 16-month high of 59.1 in July from 58.4 in June. The manufacturing upturn was driven by robust gains in new orders and output, though business sentiment and hiring momentum softened.

 

Composite PMI at fastest pace since April 2024

The composite PMI, which combines both manufacturing and services, edged up to 61.1 in July from 61.0 in June, the quickest pace since April 2024.

 

However, the Future Output Index fell to its lowest since March 2023, signalling that while current demand is strong, growth expectations are becoming more cautious.