India Services PMI at 53.3 in July: Export demand, hiring stay supportive
Synopsis
India's services sector stayed in growth mode in July, but the pace slowed sharply — PMI fell from 57.4 to 53.3, hitting the weakest new-business growth since February 2022. What's keeping the expansion alive: a surge in export orders from the UAE, UK and US, and a hiring rebound after June's six-month low. The real question is whether domestic demand can catch up before the export tailwind fades.
Key Takeaways
The HSBC India Services PMI came in at 53.3 in July 2025 , down from 57.4 in June but above the 50-point growth threshold.
New business growth slowed to its weakest pace since February 2022 , weighed by softer domestic demand and stiffer competition.
Export orders from the UAE , UK , and US grew at a faster pace than overall new business, emerging as a key support factor.
Hiring rebounded from June's six-month low , boosting overall private-sector job creation.
Input cost inflation eased to a six-month low ; selling prices rose at the fastest pace since April , supporting margins.
The HSBC India Composite PMI stood at 54.3 in July, confirming continued private-sector expansion.
India's services sector held firmly in expansion territory in July 2025, with the HSBC India Services PMI Business Activity Index registering 53.3, down from 57.4 in June but comfortably above the 50-point threshold that separates growth from contraction. The reading, released on Wednesday, 5 August, signals continued momentum in the sector even as the pace of expansion moderated.
Export Demand Emerges as a Key Driver
Overseas demand proved a standout support factor in July, with new export orders growing at a faster pace than overall new business. Service providers cited improved client activity from the UAE, the UK, and the US as the primary contributors to stronger international inflows. This cross-geography spread of demand suggests India's services exports are not overly reliant on any single market — a structural positive.
Overall new business inflows did expand for another consecutive month, though the pace of growth slowed to its weakest level since February 2022. Firms attributed the softening to subdued domestic demand conditions, intensifying competition, and a decline in customer enquiries.
Hiring Rebounds After June's Six-Month Low
Employment in the services sector improved from June's six-month low, with companies continuing to add to their workforces. While the increase in headcount remained modest, the rebound in services hiring helped lift overall private-sector job creation. This is notable given that manufacturing employment trends have been uneven in recent months.
Pranjul Bhandari, Chief India Economist at HSBC, said: 'India's services sector continued to expand in July, albeit at a slightly slower pace, as new business growth eased in both domestic and export markets after several months of strong performance. Hiring showed a moderate rebound, while profit margins improved as input costs softened and firms increased their selling prices.'
Cost Pressures Ease, Margins Improve
Input cost inflation softened to a six-month low in July and stayed below the long-run average, even as firms reported higher fuel, labour, material, technology, and transportation expenses. Simultaneously, companies raised their selling prices at the fastest pace since April, a combination that supported profit margins — a welcome development for an industry that had faced sustained cost pressures through the first half of the year.
Business Sentiment and the Composite Picture
Business confidence remained positive, underpinned by expectations of stronger demand, improving market conditions, and a pickup in inbound tourism. However, overall optimism eased to a seven-month low, reflecting caution about the durability of the current expansion cycle.
The broader HSBC India Composite PMI Output Index — which captures both manufacturing and services activity — stood at 54.3 in July, confirming continued private-sector expansion. This comes amid a global environment of uneven growth, where India's services sector has consistently outperformed peers. With export demand holding firm and cost dynamics turning favourable, the sector's near-term trajectory will hinge on whether domestic demand recovers its earlier momentum.
Point of View
But the detail that new business growth hit its weakest level since February 2022 deserves more attention than the headline number. Domestic demand is clearly losing steam, and the sector is increasingly leaning on export orders — a narrower and more volatile base. The margin improvement story is real, but it is being driven by cost softening rather than pricing power, which means it could reverse quickly if fuel or labour costs spike. India's services PMI has been a bright spot in a choppy global economy; the risk is that policymakers read the above-50 print as comfort and underestimate the deceleration underneath it.
NationPress
5 Aug 2026
Frequently Asked Questions
What is the HSBC India Services PMI for July 2025?
The HSBC India Services PMI Business Activity Index stood at 53.3 in July 2025, down from 57.4 in June. The reading remains above the 50-point mark that separates expansion from contraction, indicating the sector continued to grow, albeit at a slower pace.
Why did India's services PMI slow in July?
The slowdown was driven by softer domestic demand conditions, intensifying competition, and fewer customer enquiries, which pushed new business growth to its weakest level since February 2022. While export orders remained strong, they were not enough to offset the domestic moderation.
Which countries drove India's services export demand in July?
Service providers reported improved business from clients in the UAE, the UK, and the US. Orders from these markets grew at a faster pace than overall new business, making overseas demand a key pillar of the sector's expansion in July.
How did hiring in India's services sector perform in July?
Hiring improved from June's six-month low, with service providers continuing to expand their workforces. The increase in employment was modest but helped lift overall private-sector job creation across the economy.
What does the HSBC India Composite PMI show for July 2025?
The HSBC India Composite PMI Output Index, which tracks both manufacturing and services, came in at 54.3 in July, confirming that private-sector activity as a whole remained in expansion territory despite the moderation in services growth.
