HSBC India Services PMI®
India's service economy expanded further in July 2026, but growth lost substantial momentum according to the HSBC India Services PMI® release. The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 57.4 in June to 53.3 in July, indicating the weakest growth rate in 53 months (close to four-and-a-half years) while remaining above the neutral 50.0 mark that separates expansion from contraction.
Business activity rose at the weakest rate since early-2022, with new business inflows increasing only moderately amid reports of softer demand, competitive pressures, fewer enquiries, and order postponements. Out of the four broad areas of India's service economy monitored by the survey, only Finance & Insurance recorded quicker rates of expansion in both output and sales.
New export business remained a bright spot, rising at a solid rate that was stronger than total sales growth. Survey participants cited improving demand from clients in the UAE, UK, and US in particular. Employment showed a moderate rebound as service providers continued to add to their payrolls, with 6% of firms reporting higher payroll numbers while 92% indicated no change.
Backlogs of work decreased at the quickest pace in close to five years due to limited bookings and weak sales performances. Input cost inflation eased to its lowest rate since January 2026 and was described as modest, the weakest in six months and below its long-run average. Panellists reported greater fuel, labour, material, technology, and transportation costs.
At the sub-sector level, Consumer Services posted the strongest rate of cost inflation (albeit the softest since start of 2026) but was at the bottom of the charge inflation rankings. Real Estate & Business Services occupied the top spot for output price increases. Across the service economy as a whole, selling charges were raised to the quickest pace since April.
The HSBC India Composite PMI Output Index, which combines manufacturing and services, fell from 57.1 in June to 54.3 in July, indicating the weakest pace of private sector expansion since March 2022. There was a particularly sharp slowdown in the service economy, while factory production growth ticked marginally higher. The rate of input cost inflation across the private sector eased to a six-month low, but selling charges rose at the fastest pace since April.
Business confidence among services companies slipped to a seven-month low in July, though firms remained hopeful due to expectations of better demand and market conditions, plans to price competitively, and forecasts of greater inbound tourism.