India’s Services Sector PMI Reaches 11-month High in July Driven by Strong Export Demand

The country’s services sector has maintained its steady growth in July with the HSBC India Services Purchasing Managers’ Index (PMI) reaching an 11-month high of 60.5, a little above 60.4 in June, the S&P Global data released on Tuesday said.

Survey respondents have given strong advertising campaigns, new client onboarding and solid demand as the primary drivers of growth. Indian firms secured contracts from Asia, Canada, Europe, the UAE, and the US with export orders showing improvement. In terms of sectors, finance and insurance have led growth while real estate and business services lagged. 

The latest PMI reading shows that India’s service sector has now witnessed expansion for four consecutive years.

According to HSBC's Chief India Economist Pranjul Bhandari, “At 60.5, the services PMI indicated a strong growth momentum, led by a pick-up in new export orders. Future optimism rose but remained below 1H25 levels.”

In addition to that, the latest report noted that input costs and output charges were rising at a faster pace than in June, thereby reflecting higher food, freight as well as labour expenses.

In July, the growth in employment eased to its weakest pace in 15 months, with less than 2 per cent of surveyed companies adding staff. But on the other hand, input costs and output charges rose at faster rates than in June. “At 60.5 in July, the seasonally adjusted HSBC India Services PMI Business Activity Index – based on a single question asking how the level of business activity compares with the situation the month before – was little-changed from 60.4 in June and therefore signalled another sharp increase in output,” the report noted.

However, survey participants pointed out to sustained increase in new business intakes as the main aspect behind output growth. According to ones being surveyed, advertising, demand buoyancy and new client on boarding are the driving force behind the new orders.

Manufacturing Reaches 16-month High

Last week, another survey released by S&P Global said that India’s manufacturing sector grew at its fastest pace in July since March 2024, driven by strong demand and robust new orders.

From a 58.4 in June, the HSBC India Manufacturing Purchasing Managers’ Index rose to 59.1 in July. As per the survey, the growth was triggered by a sharp surge in new orders. The index rose at the fastest rate in nearly five years, owing to “favourable market conditions and effective marketing efforts". As a result, output growth was seem at a 15-month high.