India’s services and composite sectors continued to expand in June, but growth eased compared with May. The HSBC India Services PMI Business Activity Index fell to 57.4 in June from 59.8 in May, marking its lowest level in 17 months.
The HSBC India Composite PMI Output Index also eased to 57.1 in June from 59.3 in May, recording its weakest expansion since March.
The reading remained well above the 50-mark, indicating that both the sector continued to grow.
“The loss of momentum points to more challenging market conditions and weaker demand, particularly at home. Even so, external demand held up well as overseas sales stayed robust and growth reached a three-month high. Price pressures also continued to cool, with both input cost and output charge inflation moderating as geopolitical disruptions in the Middle East began to subside,” Pranjul Bhandari, Chief India Economist at HSBC, said.
The report showed that slower growth in services activity pulled down the overall private sector performance.
New business growth slows
Services companies reported the slowest rise in new business in more than two-and-a-half years. Many firms said challenging market conditions and reduced client interest affected demand for their services.
At the same time, some businesses continued to benefit from competitive pricing, stronger ecommerce demand, higher customer bookings and better local tourism.
Export demand remains strong
Despite softer domestic demand, overseas business remained resilient.
New export orders rose at the fastest pace in three months, with companies reporting stronger demand from clients in Australia, Belgium, Canada, Germany, Malaysia, Nepal, Oman, Qatar, Singapore, the UAE and the US.
Hiring activity pauses
Companies largely paused hiring during June after adding workers in April and May. Outstanding work also remained broadly stable, suggesting firms had enough staff to handle current workloads.
Inflation eases further
Cost pressures continued to moderate during the month. Input cost inflation slowed to a five-month low as firms reported higher electricity, food, fuel and transportation costs, but at a slower pace than before.
Companies also increased the prices they charged customers at the weakest pace since November 2025, reflecting easing inflationary pressures.
Business confidence weakens
Business optimism softened in June, with overall confidence falling to a five-month low. Companies remained hopeful about growth over the next year, supported by equipment purchases, marketing efforts and new client enquiries. However, they also highlighted competition, challenging economic conditions and rupee depreciation as potential risks.