India's services activity hit 10-month high in June

New Delhi: India’s services sector output rose to a 10-month high in June, driven by sales, a rise in new order intakes, and an upturn in positive demand trends, according to a private survey released on Thursday.

The seasonally adjusted HSBC India Services PMI Business Activity Index, compiled by S&P Global, rose to 60.4 in June, up from 58.8 in May, 58.7 in April, and 58.5 in March, and well above the 50-mark indicating expansion.

The increase in export orders was among the strongest in the series’s history, while price pressures eased in June, with both input cost and output charge inflation softening since the previous month, the survey said.

It added that during June, new orders expanded at the fastest rate since August 2024, with services companies benefitting most from the continued strength of the domestic market, alongside a marked increase in new export business.

“The Services PMI business activity index was up to a ten-month high, led by a sharp rise in new domestic orders,” said Pranjul Bhandari, chief India economist at HSBC.

“Margins improved, as the rise in input costs was below that seen for output charges. Service providers remained optimistic about future growth, though their confidence faded a tad,” she added.

Slowing GDP growth

India’s services sector, a pillar of its economy, accounts for more than half of the country’s gross domestic product.

India’s GDP expanded 6.5% in FY25, bolstered by a 7.4% growth in the January-March quarter. The economy grew 9.2% in FY24, driven by a 7.8% expansion in the January-March quarter, and surpassing the Reserve Bank of India’s 7% forecast.

RBI projects 6.5% GDP growth in FY26, driven by rural demand, public investment, and strong services exports.

India’s manufacturing sector activity rose to a 14-month high in June on the back of expansion in output, new orders, and job creation.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 58.4 in June, up from 57.6 in May. It was at 58.2 in April and 58.1 in March.

Composite output index rises

The HSBC India Composite PMI Output Index rose to 61 in June from 59.3 in May, indicating the fastest rate of expansion in 14 months.

Growth quickened at both manufacturers and service providers.

Meanwhile, demand for both goods and services strengthened notably in June, with aggregate new business rising at the fastest pace since August 2024, driven by a record surge in international sales, the survey said.

“However, despite an uptick in job creation among manufacturers, employment growth in the private sector softened,” it said.

“This reflected a slowdown among service providers. The overall rate of expansion was nevertheless historically elevated,” it added.