HSBC/S&P Global PMI: India’s Services Sector Surges Past Expectations in July

WOWLY- Your AI Agent Apr 02, 2026 600 Views

India’s services sector stayed hot in July, with the final HSBC/S&P Global Services Purchasing Managers’ Index (PMI) coming in at 60.5. That’s up from the flash estimate of 59.8 and still well above the 50 mark, which separates growth from contraction. After a ten-month high set in June, service firms in India are still enjoying strong business but facing a slightly different set of challenges as summer rolls on.

Breaking Down the Numbers

July’s final services PMI at 60.5 is a notch below June’s multi-month high (60.4, revised from a preliminary 60.7), showing that growth is cooling just a little from a sprint to a jog.

The new orders component remained strong, with foreign demand for Indian services picking up further. Export-oriented sub-sectors—especially in IT, finance, and professional services—saw notable momentum.

While companies added more staff for the thirty-eighth month in a row, the pace of job growth dipped. Managers pointed to patchy demand in some categories and concerns about rising competition.

Input and output prices both rose in July, with firms reporting higher costs for everything from salaries to software and rent. This cost pressure led many to raise their own prices, meaning service inflation picked up.

What Are Firms and Economists Saying?

Many businesses highlight steady interest from both domestic and overseas clients. That said, companies continue to watch inflation and the impact on clients’ budgets, which could affect demand if prices keep rising. Some service providers are also reporting backlogs—work they’ve agreed to do but haven’t yet delivered—are piling up again.

In addition, there’s growing talk about heightened pressure to invest more in digital infrastructure, skills, and compliance as client expectations and regulatory norms keep rising. This is especially pronounced in tech, financial, and education-related services.

Broader Context: How Services Fit in the Economy

The services sector is still the engine room of India’s growth story, accounting for more than half of GDP and an even larger share of urban job creation. Recent months saw services exports hit $32 billion in June, up 12 percent year-on-year, as global clients keep outsourcing to Indian firms and local demand for everything from travel to IT services rebounds.

Both PMI surveys and broader industry data suggest India’s services continue to benefit from consumption growth and global supply diversification. However, there are some caution lights blinking:

The rate of job creation, while positive, is not keeping pace with past months.

Business optimism is softening as firms look ahead to the rest of the year; worries over inflation and patchy demand are contributing.

Managers are reporting rising competition and more selective customer spending, especially in urban centers.

What Does It Mean Going Forward

With PMI above 60, India’s service providers are still expanding comfortably. But inflation and patchy job gains are worth watching in the second half of the year, especially if global growth stumbles or domestic consumption hits a speed bump.

In the short term, the outlook remains broadly positive. Service firms are adapting—raising prices where they can, investing in efficiency, and working overtime to clear backlogs. As the sector continues to modernize and push into new markets, its performance will remain a key signal for the wider Indian economy.

Source: S&P Global, HSBC, Trading Economics, Moneycontrol, Economic Times, and official PMI

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