India’s Services Sector PMI Hits 11-Month High of 60.5 in July

New Delhi: Driven by strong international demand and sustained domestic sales in the country, India’s services sector continued its strong run in July as the HSBC India Services Purchasing Managers’ Index or PMI climbed to an 11-month high of 60.5, up marginally from 60.4 in June, a private survey showed on Tuesday.

As per the survey conducted by the seasonally adjusted HSBC India Services PMI Business Activity Index, the rate of expansion was the best seen since August 2024. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.The survey also showed that sustained increases in new business intakes were the main aspect behind output growth. “At 60.5, the services PMI indicated a strong growth momentum, led by a pick-up in new export orders,” said Pranjul Bhandari, chief India economist at HSBC.

Indian service providers, the survey said, welcomed a stronger improvement in international demand for their services. “They reportedly secured new work from Asia, Canada, Europe, the UAE and the US. Going ahead, service providers were on average optimistic about their expectations for output in the year ahead,” it said.

The survey, however, pointed out that among the factors supporting business confidence were efficiency gains, marketing, tech innovation and a growing online presence. On the price front, input costs and output charges rose at faster rates than in June. “The solid rise in output prices reflected greater cost burdens and demand strength,” the survey said.

The headline retail inflation has remained below 4 per cent since February. It was at 2.1 per cent in June. The wholesale price inflation also turned negative after a gap of 19 months, declining 0.13 per cent in June. “Both input and output prices rose a tad faster than in June on the price front, but this could change going forward as indicated by the recent CPI and WPI prints,” Bhandari said.

On the jobs front, although the upturn added pressure on firms’ capacity, hiring moderated. July's increase in employment was the slowest in 15 months. “The rate of job creation was only slight, broadly converging to its long-run average. Fewer than 2 percent of companies took on additional staff, with the vast majority indicating no change from June,” the survey said.