India Services PMI Hits 17-Month Low In June As Demand Weakens: HSBC India PMI

New Delhi, Jul 3 (KNN) India’s services sector expanded at its slowest pace in 17 months in June, with the HSBC India Services PMI Business Activity Index, compiled by S&P Global, falling to 57.4 from 59.8 in May.

Weak domestic demand and reduced client interest weighed on sales and output growth, the monthly survey showed on Friday.

Despite the moderation, the reading remained comfortably above both the neutral 50.0 mark and the long-run average of 54.4, keeping the sector firmly in expansion territory. 

New order growth, however, slowed to its weakest pace in more than two-and-a-half years, while hiring activity remained broadly stagnant and business confidence weakened.

Pranjul Bhandari, Chief India Economist, HSBC, said, “The loss of momentum points to more challenging market conditions and weaker demand, particularly at home.” 

Despite this, external demand remained strong, with overseas sales robust and growth hitting a three-month high, he added.

Export Orders a Bright Spot

New export orders rose at the fastest pace in three months in June, with services firms reporting improved demand from clients in Australia, Belgium, Canada, Germany, Malaysia, Nepal, Oman, Qatar, Singapore, the UAE, and the United States.

Easing Price Pressures

Input cost inflation eased to a five-month low in June, with survey participants citing higher electricity, food, fuel, and transportation prices, though the rate of increase remained moderate by historical standards and below the long-run average. 

Output charge inflation also moderated, retreating to a seven-month low as geopolitical disruptions from the West Asia conflict began to subside.

“Price pressures also continued to cool, with both input cost and output charge inflation moderating as geopolitical disruptions in the Middle East began to subside,” Bhandari noted.

Composite PMI Also Softens

The HSBC India Composite PMI Output Index, which tracks both manufacturing and services, fell to 57.1 in June from 59.3 in May, reflecting a broad-based slowdown. 

Aggregate sales volumes rose at their weakest pace in three months, job creation slipped to its softest reading in 2026 so far, and overall business sentiment fell to a five-month low, remaining below the historical trend.

Indian services firms continued to project output growth over the next 12 months, though the degree of optimism has moderated. 

Companies cited equipment acquisition, marketing efforts, and new client enquiries as potential growth drivers, while flagging competition, challenging economic conditions, and rupee depreciation as headwinds.

(KNN Bureau)