India’s services sector activity lost momentum in June, with growth easing to a 17-month low due to weakening domestic demand and difficult market conditions, according to a monthly survey released on Friday. The HSBC India Services PMI Business Activity Index declined to 57.4 in June from 59.8 in May.
Although the index remained above the 50-point threshold that separates expansion from contraction, the reading marked the weakest level since January 2025, indicating a slowdown in the pace of growth.
The survey noted that while the services sector continued to expand, overall output and sales growth were constrained by softer client demand and challenging business conditions.
Many firms reported reduced interest from domestic customers, which weighed on new business inflows.
As demand softened, hiring activity also slowed. After adding jobs in April and May, service providers largely held back on fresh recruitment in June, reflecting caution over future demand trends.
HSBC Chief India Economist Pranjul Bhandari said the services PMI remained in expansion territory but pointed to a clear loss of momentum.
She noted that weaker domestic demand and challenging conditions were key factors behind the slowdown, even as overseas demand showed strength.
According to the survey, external demand remained a bright spot, with export orders rising at their fastest pace in three months.
Companies reported stronger international sales from key markets including the United States, Germany, Australia and the UAE.
On the inflation front, cost pressures eased further. Input cost inflation fell to a five-month low, with firms reporting increases in electricity, food, fuel and transport expenses but at a slower pace than before.
Meanwhile, the rise in output prices charged to customers was the weakest since November 2025.
The HSBC India Composite PMI Output Index, which combines services and manufacturing activity, also moderated to 57.1 in June from 59.3 in May, signalling a broad-based slowdown in growth momentum across sectors.
Overall sales growth slowed to a three-month low, job creation weakened to its lowest level so far this year, and business confidence dropped to a five-month low, reflecting caution among service providers.
Despite these challenges, strong export demand continued to support the sector, helping offset some of the weakness in domestic consumption.
