India’s services sector activity declined to its lowest level in 17 months, according to a private survey, as new order growth slowed to the weakest pace in more than two and a half years. The HSBC India Services PMI Business Activity Index fell to 57.4 in June from 59.8 in May. The figure stayed above the 50 threshold indicating expansion and above its long-term average, yet it represented the slowest increase since January 2025. HSBC Chief India Economist Pranjul Bhandari noted that reduced momentum reflected tougher market conditions and softer domestic demand. New export orders grew at the quickest rate in three months, supported by stronger demand from Australia, Germany, Singapore, the UAE and the United States. Domestically, firms cited greater competition and lower client interest as key constraints, though some benefited from competitive pricing, e-commerce sales, higher bookings and tourism. Hiring remained flat in June after gains in prior months, as staffing levels were viewed as adequate. Input cost increases slowed to a five-month low, aided by reduced geopolitical tensions in West Asia, despite rises in electricity, food, fuel and transport expenses. The Composite PMI Output Index, covering both manufacturing and services, dropped to 57.1 in June from 59.3 in May, marking the weakest expansion since March 2026. Business optimism reached a five-month low amid concerns over competition, economic pressures and rupee weakness, though most firms anticipate growth from equipment upgrades, marketing and new client acquisitions over the next year.
