India services sector hits 11-month high in July on strong demand, export orders
The seasonally adjusted HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 60.5 in July from 60.4 in June, marking the strongest growth since August 2023. While the month-on-month rise was modest, the index has now stayed well above the 50-point threshold that separates growth from contraction for over two years, underscoring sustained momentum in the sector.
'Sustained increases in new business intakes were identified by survey members as the main aspect behind output growth,' the survey said. 'According to them, advertising, demand buoyancy and new client onboarding all underpinned the latest upturn in new orders. July's rise was sharp and the second-quickest in nearly a year (behind June).'
The HSBC India Services PMI is based on responses from around 400 firms across a wide spectrum of service industries, including consumer services (excluding retail), transport, information and communication, finance, insurance, real estate, and business services.
'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 H1, 25 levels,' said Pranjul Bhandari, chief India economist at HSBC. 'On the price front, both input and output prices rose a tad faster than in June, but this could change going forward as indicated by the recent CPI and WPI prints.'
The services sector, which accounts for over half of India's gross domestic product (GDP), has been a key driver of recent economic growth.
India's GDP expanded 6.5% in FY25, supported by a 7.4% growth in the March quarter. This followed a 9.2% expansion in FY24, ahead of the Reserve Bank of India's (RBI) 7% projection. The central bank expects GDP growth to remain at 6.5% in FY26, powered by rural demand, public investment, and resilient services exports.
Meanwhile, manufacturing activity also gathered pace. The HSBC India Manufacturing PMI rose to a 16-month high of 59.1 in July, up from 58.4 in June, supported by solid gains in output and new orders.
Together, these trends pushed the HSBC India Composite PMI Output Index up to 61.1 in July from 61.0 in June, its highest reading since April 2024.
'The upturn in business activity was supported by strengthening demand for Indian goods and services. At the composite level, the rate of sales growth hit a 15-month high,' the survey said.
It added that while both input costs and output charges rose more quickly in July, only output inflation exceeded the long-run average.
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