India’s services sector expanded at its fastest pace in 11 months in July, supported by a sharp rise in export orders and solid sales growth, according to the HSBC India Services PMI released Tuesday. The Services Purchasing Managers’ Index (PMI) rose marginally to 60.5 in July from 60.4 in June, marking the highest level since August 2024. A reading above 50 indicates expansion, while one below 50 signals contraction. Pranjul Bhandari, Chief India Economist at HSBC, said the index reflected strong growth momentum, driven by a pick-up in new export orders, as quoted by PTI. “At 60.5, the services PMI indicated a strong growth momentum, led by a pick-up in new export orders,” he said. The report noted that Indian service providers received new business from Asia, Canada, Europe, the UAE and the US. This growth in new international work was cited as the key reason for output expansion. Firms in the sector remained optimistic about output over the next year. Respondents attributed their confidence to improved efficiency, greater digital adoption, marketing efforts and technological upgrades. However, the report also flagged an increase in input and output prices compared to June. The rise in charges was attributed to higher operating costs and strong demand.“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,” Bhandari further said. Retail inflation based on the Consumer Price Index remained below 4 per cent for the fifth consecutive month, falling to 2.1 per cent in June. Wholesale inflation turned negative in June, declining by 0.13 per cent after staying positive for 19 months. Despite the strong activity, job creation slowed in July. The report recorded the lowest employment growth in 15 months, with fewer than 2 per cent of companies hiring additional staff. The release comes as the Reserve Bank of India’s Monetary Policy Committee, led by Governor Sanjay Malhotra, began its three-day policy meeting on Monday. The outcome, expected on Wednesday (August 6), is likely to see the central bank hold interest rates steady, with economists citing the need for more macroeconomic clarity following the US decision to impose a 25 per cent tariff on Indian goods from August 7. The HSBC India Composite PMI Output Index, which tracks both manufacturing and services activity, rose slightly to 61.1 in July from 61.0 in June. This marks the strongest expansion in overall private sector output since April 2024. The survey, compiled by S&P Global, gathers responses from around 400 services companies across India.
