India Services PMI at 57.4 in June as domestic demand softens
Synopsis
India's services sector kept growing in June, but the engine is running cooler. The HSBC Services PMI held at 57.4 — well above the expansion threshold — yet new domestic business hit a two-and-a-half-year low. The saving grace: export orders surged to a three-month high, and inflation pressures eased to levels not seen since late 2025.
Key Takeaways
HSBC India Services PMI stood at 57.4 in June 2025 , above the neutral 50 mark, signalling continued expansion.
New business growth hit its slowest pace in over two-and-a-half years , with firms citing challenging domestic market conditions.
New export orders grew at the fastest pace in three months , with demand from Australia, Canada, Germany, UAE and the US .
Input cost inflation fell to a five-month low ; output price inflation at its weakest since November 2025 .
The HSBC India Composite PMI (manufacturing + services) came in at 57.1 in June, indicating broad-based private sector growth.
India's services sector maintained its growth momentum in June 2025, with the HSBC India Services PMI registering 57.4 — comfortably above the neutral 50 mark that separates expansion from contraction. The reading, released on Friday, 3 July, signals continued business activity growth even as softer domestic demand tempered the pace of expansion.
Key Developments
The headline figure, while still firmly expansionary, reflected a moderation in output growth. New business intake recorded its slowest increase in over two-and-a-half years, with some firms citing challenging market conditions and reduced client interest. Hiring activity remained largely unchanged, as companies indicated that staffing levels were adequate following strong recruitment in April and May.
Despite the domestic softness, companies reported support from competitive pricing, stronger e-commerce demand, higher customer bookings, and improved local tourism activity.
What the Economist Said
Pranjul Bhandari, Chief India Economist at HSBC, noted that while the PMI remained in expansionary territory, the loss of momentum reflected more challenging market conditions and weaker demand — particularly on the home front. 'Even so, external demand held up well as overseas sales stayed robust and growth reached a three-month high,' she said.
Export Orders Provide a Bright Spot
Overseas demand emerged as a key counterweight to domestic softness. New export orders grew at the fastest pace in three months, supported by improved demand from markets including Australia, Canada, Germany, the UAE, and the US. This divergence between domestic and external demand is a pattern worth watching, particularly as global trade conditions remain uncertain.
Inflation Pressures Ease
On the cost front, the data pointed to easing inflationary pressures. Input cost inflation fell to a five-month low, while output price inflation moderated to its weakest level since November 2025. This could offer the Reserve Bank of India (RBI) additional comfort on the services inflation front as it calibrates monetary policy.
Broader Private Sector Outlook
The HSBC India Composite PMI Output Index — which combines manufacturing and services — came in at 57.1 in June, indicating continued broad-based private sector expansion. Business confidence moderated but remained positive, with firms continuing to expect growth over the coming year, backed by new client enquiries, marketing efforts, and technology investments. The trajectory of domestic demand in the months ahead will be the key variable to watch.
Point of View
But the detail is less reassuring — the slowest new-business intake in over two-and-a-half years suggests domestic demand is losing steam faster than the headline number implies. The reliance on export orders to prop up the composite reading is a structural vulnerability, particularly if global trade headwinds intensify. Easing input cost inflation is a genuine positive for the RBI, but policymakers should be cautious about reading this PMI as a green light: a services sector that was the economy's primary growth engine is now flashing amber on the demand side.
NationPress
3 Jul 2026
Frequently Asked Questions
What is the India Services PMI for June 2025?
The HSBC India Services PMI for June 2025 came in at 57.4, above the neutral 50 mark, indicating continued expansion in the sector. However, the reading reflected a moderation in growth, with new domestic business rising at its slowest pace in over two-and-a-half years.
Why did India's services PMI moderate in June?
The moderation was driven primarily by softer domestic demand, with some firms citing challenging market conditions and reduced client interest. New business intake recorded its slowest increase in more than two-and-a-half years, even as export orders remained robust.
Which overseas markets drove India's services export demand in June?
New export orders for India's services sector grew at their fastest pace in three months in June, supported by improved demand from Australia, Canada, Germany, the UAE, and the US, according to the HSBC PMI data.
What does the HSBC India Composite PMI show for June 2025?
The HSBC India Composite PMI Output Index, which covers both manufacturing and services, came in at 57.1 in June 2025, indicating continued broad-based expansion across the private sector.
What happened to inflation in India's services sector in June?
Inflationary pressures eased notably in June, with input cost inflation falling to a five-month low and output price inflation moderating to its weakest level since November 2025. This could offer the RBI additional comfort as it assesses monetary policy.
