India’s services sector continued to expand in July, supported by healthy export demand and sustained hiring, although growth moderated from the previous month, according to the HSBC India Services Purchasing Managers’ Index (PMI) released on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell to 53.3 in July from 57.4 in June but remained above the 50-point threshold that separates expansion from contraction.
Service providers reported another month of growth in business activity, with strong overseas demand providing key support. Companies cited improved business from clients in the UAE, the UK and the US, resulting in new export orders growing at a faster pace than overall new business.
Overall new business inflows also increased during the month, although the pace of growth slowed to its weakest level since February 2022 amid softer demand conditions, intense competition and fewer customer enquiries.
Employment growth strengthened from June’s six-month low as firms continued to expand their workforce. While hiring remained modest, increased recruitment in the services sector contributed to overall private-sector job creation.
“India’s services sector continued to expand in July, albeit at a slightly slower pace, as new business growth eased in both domestic and export markets after several months of strong performance. Hiring showed a moderate rebound, while profit margins improved as input costs softened and firms increased their selling prices,” said Pranjul Bhandari, Chief India Economist at HSBC.
According to the survey, input cost inflation eased to a six-month low and remained below its long-run average despite higher expenses related to fuel, labour, materials, technology and transportation. At the same time, firms raised selling prices at the fastest pace since April, helping improve profit margins.
Business confidence remained positive, supported by expectations of stronger demand, improving market conditions and higher inbound tourism. However, overall optimism slipped to a seven-month low.
The HSBC India Composite PMI Output Index, which measures combined manufacturing and services activity, stood at 54.3 in July, indicating continued expansion in overall private-sector output.
(With inputs from IANS)
