Key facts
- India's services sector expanded at its slowest pace in 17 months in June.
- Domestic demand weakened sharply, and new business growth was the slowest in over two-and-a-half years.
- New export orders grew at their fastest pace in three months.
- Hiring in the services sector nearly stalled.
- Input cost inflation eased to a five-month low.
- Business confidence fell to a five-month low.
India's dominant services sector expanded at its slowest pace in 17 months in June, as domestic demand weakened sharply and overall new business grew at its slowest rate in over two-and-a-half years, according to HSBC's India Services Purchasing Managers' Index (PMI) compiled by S&P Global.
The PMI fell to 57.4 last month from May's 59.8, with readings above 50.0 indicating growth. "The loss of momentum points to more challenging market conditions and weaker demand, particularly at home," said Pranjul Bhandari, chief India economist at HSBC. New business, a key gauge of demand, rose at the slowest pace since November 2023.
International demand offered a partial offset, with new export orders growing at their fastest pace in three months. With demand softening, headcount was barely increased, with only around 1% of firms reporting taking in additional staff, a marked retreat from strong job creation in April and May. Input cost inflation eased to a five-month low, and firms passed on less of that burden to clients as the prices charged sub-index fell to a seven-month low.
Business confidence faded to a five-month low, with firms citing competition, difficult economic conditions, and rupee depreciation as concerns. The India Composite PMI, which covers both services and manufacturing, slipped to its weakest since March as output, new orders, and employment all expanded at softer rates across the private sector.