Private Sector Momentum Builds In June As Services PMI Hits 10-Month High

The expansion was visible across major services segments, with Finance & Insurance registering the strongest growth in both activity and orders

The report noted a moderation in input cost inflation, which fell to its lowest level in ten months and remained under the long-term average

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India's services sector saw a robust expansion in June, signaling renewed momentum in the economy, with both domestic and overseas demand contributing to the uptick. According to the HSBC India Services Purchasing Managers’ Index (PMI) report, the sector recorded its fastest pace of growth in ten months, providing an optimistic start to the new fiscal year.

The seasonally adjusted Services PMI climbed to 60.4 in June from 58.8 in May, reaching its highest reading since August 2024. This improvement was fueled by strong increases in domestic orders and a steady, albeit slower, rise in international business.

“The Services PMI business activity index was up to a ten-month high, led by a sharp rise in new domestic orders. New export orders also expanded, albeit at a softer pace. 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,” said Pranjul Bhandari, Chief India Economist at HSBC.

Broad-Based Growth Across Segments

The expansion was visible across major services segments, with Finance & Insurance registering the strongest growth in both activity and orders. Real Estate & Business Services, however, lagged behind with the slowest performance among tracked categories. Export demand remained strong from regions such as Asia, the Middle East, and the US, maintaining one of the highest levels since data collection began in 2014.

Employment Expands But Hiring Slows

Employment in the services industry rose for the 37th consecutive month in June. However, the hiring pace eased slightly compared to the record surge seen in May, affecting overall job gains in the private sector.

The report noted a moderation in input cost inflation, which fell to its lowest level in ten months and remained under the long-term average. While some firms faced increased staff-related costs, many successfully passed these onto customers due to strong demand and pricing flexibility. Nevertheless, output price inflation moderated from May, though it continued to exceed historical norms.

Composite PMI At 14-Month High

The overall private sector also showed healthy growth, with the HSBC India Composite PMI Output Index hitting 61.0 in June, the strongest reading in over a year. Both manufacturing and services sectors benefited from resilient domestic demand and a record surge in international sales, underlining the strength of India’s economic fundamentals moving into the second quarter of FY25.