India’s services sector is riding a wave of strong momentum, hitting a 10-month high in June as demand surged both at home and abroad. According to the HSBC India Services PMI Business Activity Index compiled by S&P Global, the sector climbed to 60.4 in June, up from 58.8 in May. This marks a significant jump, placing the sector well above the neutral 50.0 threshold that separates growth from contraction.
The standout performance was fueled by the sharpest rise in new orders since August 2024. Indian service providers reported robust demand across segments, with particularly strong contributions from exports. Panelists cited improved demand from Asian, Middle Eastern and US markets, suggesting that India’s services are gaining traction globally.
On the domestic front, businesses enjoyed continued support from strong consumer and enterprise spending. This translated into solid business volumes and increased backlogs, reflecting the growing workload across various service categories.
Employment in the sector also continued its strong streak, rising for the thirty-seventh straight month. While job growth slightly cooled from the record pace seen in May, it still outpaced the long-term average, underlining the sector’s sustained expansion and its ability to generate employment.
Input cost pressures saw some relief, with inflation falling to a ten-month low. This offered businesses a breather, though charge inflation remained above historical trends. Companies appeared cautious with pricing even as they passed on some cost increases to consumers. Outstanding business volumes grew modestly, but at a faster rate than in May, indicating that companies are continuing to manage healthy demand pipelines.
Despite the strong figures, the mood around future growth was mixed. Only 18 percent of surveyed firms anticipated higher activity levels over the next 12 months. This is the lowest level of optimism since mid-2022 and contributed to an overall dip in confidence levels, which remained below the long-run average. Firms cited global uncertainties and inflationary concerns as reasons for a more guarded outlook.
Meanwhile, the broader picture looks even more promising. The HSBC India Composite PMI, which merges both services and manufacturing output, rose to 61.0 in June from 59.3 in May. This represents the fastest rate of expansion in 14 months and suggests that India’s economy is currently firing on all cylinders.
As service providers continue to see consistent growth in business activity and hiring, the June PMI data paints a picture of resilience and strength in one of India’s most crucial economic sectors. Even with a slightly tempered outlook, the current momentum suggests that services will remain a key driver of growth through the second half of the year.