NEW DELHI: India’s services sector growth slowed to a 17-month low in June as weaker domestic demand, softer new business growth and subdued hiring weighed on overall activity, according to the latest HSBC India Services PMI survey released on Friday.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell to 57.4 in June from 59.8 in May, marking the weakest expansion in 17 months.
The slowdown was driven by the weakest increase in new orders in more than two-and-a-half years, highlighting softer domestic demand.
Hiring activity also nearly stalled, with only around 1 per cent of surveyed firms reporting additional recruitment in June after stronger hiring seen in April and May.
“India’s services PMI remained in expansionary territory but eased to 57.4 in June, the lowest reading in 17 months. The loss of momentum points to more challenging market conditions and weaker demand, particularly at home,” said Pranjul Bhandari, chief India economist at HSBC.
Despite weaker domestic demand, overseas business continued to support the sector. Companies reported the strongest rise in export orders in three months, driven by improved demand from clients in Australia, Belgium, Canada, Germany, Malaysia, Nepal, Oman, Qatar, Singapore, the UAE and the US.
“External demand held up well as overseas sales stayed robust and growth reached a three-month high,” Bhandari said.
Price pressures also cooled during the month, with both input cost and output charge inflation moderating as geopolitical disruptions in the Middle East began to subside.
The broader HSBC India Composite PMI Output Index slipped to 57.1 in June from 59.3 in May, indicating slower growth across the private sector.
