India’s services economy expanded at its slowest pace since February 2022 in July, reflecting softer demand and ongoing challenges, despite positive business confidence and export gains.
India’s services economy lost momentum in July, with a private survey showing the sector still growing but at its slowest pace in more than four years. According to KNN and HSBC, the seasonally adjusted services business activity index eased to 53.3 from 57.4 in June, signalling the weakest expansion since February 2022 while remaining above the 50-point line that separates growth from contraction.
The slowdown reflected softer demand at home and abroad, as well as tougher competition and deferred orders. Pranjul Bhandari, chief India economist at HSBC, said in comments reported by PTI that services activity continued to expand, but new business growth cooled in both domestic and export markets after a run of strong months. Market trackers including Trading Economics put the July reading slightly lower, at 53.1, but agreed that the index marked a 53-month low.
Hiring improved modestly after a six-month trough in June, although recruitment remained restrained. The survey said only 6% of companies reported adding staff, while most kept headcount unchanged. At the same time, input costs kept rising on the back of higher fuel, labour, materials, technology and transport expenses. Firms responded by lifting selling prices, which helped margins recover even as operating conditions became more difficult.
Export demand offered some support, with firms citing sales gains in markets including the United Arab Emirates, the United Kingdom and the United States. Business confidence remained positive, underpinned by hopes of firmer demand, competitive pricing and a pickup in inbound tourism, although sentiment slipped to a seven-month low. The broader HSBC Composite PMI, which combines services and manufacturing, fell to 54.3 in July from 57.1 in June, its weakest pace of private-sector expansion since March 2022, even as factory output held up better than services.
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