India's services growth scales 11-month peak in July on global orders

India's services sector growth scaled an 11-month high in July, driven by an increase in new orders, international sales and output, a private survey showed on Tuesday. The HSBC India Services PMI Business Activity Index touched 60.5 in July, the highest since August 2024 and a shade above 60.4 in June, according to the index compiled by S&P Global. A year earlier, the reading was 60.3.

Purchasing Managers' Index (PMI) readings above 50 indicate expansion, while those below denote contraction. "At 60.5, the services PMI indicated a strong growth momentum, led by a pickup in new export orders," said Pranjul Bhandari, India chief economist at HSBC.

The expansion in output was primarily due to sustained increases in new business, with survey respondents attributing it to advertising, demand buoyancy and new client onboarding.

The rise in July was the second strongest in the past year, following the performance in June.

Overseas demand also saw a sharp increase, with firms securing new work from Asia, Canada, Europe, the UAE and the US. The rate of growth in external sales was the second-fastest in a year, after that in May. The finance and insurance sector led in both new orders and business activity, while real estate and business services recorded the slowest expansion.

On average, service providers remained optimistic about future output, supported by expectations of efficiency gains, marketing, tech innovation and a growing online presence.

However, Bhandari added that even as optimism regarding the future rose, it remained below the levels seen in the first half of 2025.

Employment gains were modest, with July recording the weakest job growth in 15 months.

"Fewer than 2% of companies took on additional staff, with the vast majority indicating no change from June," said the survey report.

Cost pressures persisted, with firms citing higher expenses on food, freight and labour. On the other hand, charge inflation was above its long-run average, reflecting greater cost burdens and demand strength.

"On the price front, both input and output prices rose a tad faster than in June, but this could change going forward as indicated by the recent CPI (Consumer Price Index) and WPI prints," said Bhandari.