India’s services growth hits 11-month high on strong exports

India’s services sector expanded at its fastest pace in nearly a year in July, buoyed by a sharp rise in export orders and steady domestic demand, a private survey showed on Tuesday. The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, edged up to 60.5 in July from 60.4 in June, marking the highest reading since August 2023 and defying a flash estimate that had pointed to a moderation to 59.8.
A reading above 50 indicates growth in activity on a monthly basis. The latest print suggests that the country’s dominant services industry — which accounts for more than half of the economy — has now registered expansion for four consecutive years.
The survey highlighted a robust jump in international demand, with the sub-index tracking new export business registering its second-strongest growth in a year. Total new orders remained solid despite easing marginally from June’s pace, supported by marketing initiatives and new customer acquisitions.Among individual service categories, finance and insurance outperformed in both new orders and overall business activity, whereas segments such as real estate and business services posted the weakest growth.
Despite strong demand dynamics, employment growth slowed sharply to a 15-month low, suggesting that firms remain cautious about workforce expansion. Meanwhile, input cost pressures intensified due to higher food, freight and labour expenses, prompting companies to pass these increases on to consumers. The rate of output charge inflation slightly outpaced input cost inflation, the survey noted.Analysts said any renewed pickup in inflation could complicate the Reserve Bank of India’s monetary policy outlook. The central bank is widely expected to hold the repo rate steady at its August 4–6 meeting before delivering a potential rate cut later this year.
Business sentiment improved in July, with firms citing optimism around technology upgrades, expansion in online services and continued benefits from marketing campaigns. The HSBC India Composite PMI Output Index — which combines manufacturing and services activity — rose to 61.1 in July from 61.0 in June, indicating the strongest overall expansion since April 2024.

(Business Correspondent)