India PMI July 2025: India’s service providers recorded a slight growth in July with HSBC India Services Business Activity Index, or services PMI for the month accelerated to 60.5 from 60.4 in June, therefore signaling another sharp increase in output. The rate of expansion was the best seen since August 2024.
The reading above 50 signals sector expansion, while a reading below 50 indicates contraction, and 50 reflects no change. The headline figure was above its long-run average of 54.2.
According to survey respondents, strong advertising campaigns, new client onboarding, and solid demand are the primary drivers of growth. July’s rise was sharp and the second-quickest in nearly a year (behind June).
Pranjul Bhandari, Chief India Economist at HSBC, said, “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. On the price front, both input and output prices rose a tad faster than in June but this could change going forward as indicated by the recent CPI and WPI prints.”
Service providers in the country also witnessed a stronger improvement in international demand for their services. Most of the orders during the period came in from Asia, Canada, Europe, the UAE and the US. Besides, it added, the rate of expansion in external sales was sharp and the second-fastest in a year (behind May).
In terms of sectors, finance & insurance was the best performing sector in terms of both new orders and business activity. Meanwhile, real estate and business services recorded the slowest increases.
Service providers were generally optimistic about their output expectations for the coming year, citing factors such as improved efficiency, marketing efforts, technological innovation, and an expanding online presence as key drivers of confidence.
Price pressure
According to the report, input costs and output charges were increasing at a faster pace than in June, reflecting higher food, freight, and labour expenses. “The rate of inflation quickened from June, though remained mild in the context of historical data,” it said. According to anecdotal evidence, the strong rise in output prices was driven by higher cost pressures and robust demand.
Consumer services registered the highest rate of input cost inflation in July, while the fastest rise in output charges was noted at Transport, Information & Communication firms.
Meanwhile, work backlogs increased sharply, reaching their highest rate in nearly five years. Surveyed firms linked this rise to capacity constraints resulting from new business growth and outstanding client payments.
Hiring activity
The HSBC July data pointed to the weakest increase in service sector employment in 15 months. The rate of job creation was only slight, broadly converging to its long-run average. Per the report, fewer than 2 per cent of companies took on additional staff, with the vast majority indicating no change from June.
HSBC India Composite PMI
The HSBC India Composite PMI Output Index was up fractionally from 61.0 in June to 61.1 in July, indicating a sharp rate of expansion that was the quickest since April 2024.
The PMI results for July revealed mixed signs regarding the performance of the Indian private sector. New orders and output expanded at quicker rates, while job creation receded and business optimism faded. Meanwhile, inflationary pressures gathered pace. At the composite level, the rate of sales growth hit a 15-month high.