India Services PMI Falls to 17-Month Low as Domestic Demand Weakens in June

India's services sector continued to expand in June, but the pace of growth slowed to its weakest level in 17 months, according to a Reuters report. Data from the HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, showed the index declining to 57.4 from 59.8 in May.

Although the reading remained above the 50 mark that separates growth from contraction, domestic demand weakened noticeably during the month. The survey also indicated slower hiring activity and softer business confidence across the sector.

India Services PMI Drops to 57.4 in June 2026

The HSBC India Services PMI fell to 57.4 in June from 59.8 in May, although it was marginally above the preliminary estimate of 57.3. The latest reading signalled continued expansion in business activity but at a slower pace than seen in previous months.

According to the survey, the moderation reflected weaker demand conditions and slower growth in new business. June marked the weakest expansion in the services sector since January 2025, highlighting a loss of momentum in a key segment of the economy.

New Business Growth Slows to Over 2-Year Low

Overall new business growth weakened significantly during June, reaching its slowest pace in more than 2 and a half years. Survey respondents cited softer domestic demand as a major factor behind the moderation in orders.

However, international demand provided some support, with new export orders increasing at the fastest pace in 3 months. The divergence between domestic and overseas demand suggested that foreign markets offered a partial cushion against slower local activity.

India Services Sector Hiring Nearly Stalls

Employment growth in the services sector weakened considerably as firms responded to softer demand conditions. Only around 1% of surveyed businesses reported adding staff during June, a notable decline from the stronger recruitment levels recorded in April and May.

Companies appeared cautious about expanding their workforce amid slower growth in orders and concerns about the business environment. The survey indicated that hiring activity was close to stagnation despite the sector remaining in expansion territory.

Input Cost Inflation Eases Across Services Firms

Cost pressures moderated during June as inflation in key inputs eased to a 5-month low. Businesses reported slower increases in expenses related to electricity, food, fuel and transportation.

With cost growth easing, firms passed on a smaller share of expenses to customers, resulting in the prices charged sub-index falling to a 7-month low. The data suggested that price pressures remained present but were less intense compared with earlier months.

Read More: India’s Manufacturing PMI Falls To 54.2 In June Amid Softer Demand.

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Conclusion

Business confidence in the services sector declined to a 5-month low, with firms citing competition, challenging economic conditions and rupee depreciation as key concerns. The survey also pointed to broader caution linked to global trade uncertainty and financial market volatility.

Meanwhile, the India Composite PMI, which combines manufacturing and services activity, slipped to its weakest level since March as output, new orders and employment expanded at slower rates. The June data indicated that while India's private sector continued to grow, the pace of expansion moderated across several important indicators.

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