India's Services Sector Grows in July, But Job Hiring Hits 15-Month Low: HSBC Report

India’s services sector continued to grow in July, reports the HSBC India Services PMI, released Tuesday. Despite strong demand and output, hiring slowed sharply the weakest pace in 15 months. The HSBC India Services PMI Business Activity Index, seasonally adjusted, edged up from 60.4 in June to 60.5 in July. This marks the strongest output expansion since August 2024. Though business confidence stayed firm, employment growth weakened fewer than 2% of firms added staff compared to June, and most maintained the same workforce level.

Demand Fuels Growth, Exports Surge

Growth was supported by rising demand both domestically and internationally. Service providers saw rising orders from Asia, Europe, Canada, the UAE, and the U.S. The rate of external sales jumped sharply, becoming the second-fastest increase in a year behind only May. Among sectors, finance and insurance led in both new orders and activity, while real estate and professional services showed slower momentum.

Inflation Rises and Future Outlook Shows Caution

Inflation pressures grew in July, with input costs and output prices increasing faster than in June—output inflation exceeded its long-term average. Firms remained generally optimistic, but future business outlook softened. Across the combined manufacturing and services sectors, the HSBC India Composite PMI Output Index rose marginally from 61.0 in June to 61.1 in July—signifying strong private sector expansion, the best since April 2024. Yet the Future Output Index fell to its lowest since March 2023, and employment growth slowed to a 15-month low.