India Services PMI Dips to 53.3 in July Amid Slowdown

India’s services sector experienced a notable deceleration in July, despite remaining within expansionary territory. The growth momentum significantly softened as new business inflows saw only moderate increases.

Key Economic Indicators

• The seasonally adjusted HSBC India Services PMI Business Activity Index dropped to 53.3 in July from 57.4 in June.
• The HSBC India Composite PMI Output Index, encompassing both manufacturing and services, eased to 54.3 in July, down from 57.1 in June.

This slowdown was primarily driven by softer overall demand, heightened competitive pressures, and fewer new enquiries. Consequently, new business inflows rose only moderately during the month.

Limited bookings and weaker sales performances led to service providers clearing their backlogs in July. This marked the quickest pace of decline in outstanding business observed in nearly five years, following marginal increases in May and June.

Despite the domestic deceleration, new export orders demonstrated solid growth at the start of the second fiscal quarter. This rate was stronger than that seen for total sales, fueled by improving demand from clients in the UAE, UK, and US.

Understanding Price Trends

The pricing landscape saw varied movements across the services economy. Input cost inflation eased to its lowest point since January, indicating some relief on the expenditure front for businesses.

• Selling charges, however, were raised to a greater extent by service providers.
• Consumer Services recorded the strongest rate of cost inflation, though this was its softest since the start of 2026.
• Conversely, Consumer Services ranked at the bottom for charge inflation, while Real Estate & Business Services held the top spot.
• Overall, output prices across the service economy increased at their quickest pace since April.

These figures highlight a mixed economic picture for India’s services sector, balancing domestic demand challenges with robust international interest. The interplay of slowing activity and rising output prices presents a complex environment for economic planners.