India Services PMI Hits 4-Year Low in July Amidst Slowing Growth

India’s services sector experienced a notable slowdown in July, with the HSBC India Services PMI dropping to 53.3. This marks its lowest level in over four years, specifically since February 2022.

The deceleration reflects a broader loss of momentum across India’s private sector, primarily driven by a significant weakening in new business growth. This expansion recorded its slowest pace in nearly four-and-a-half years.

Key Indicators for July

• The HSBC India Services PMI fell to 53.3 in July, down from 57.4 in June.
• This represents the lowest Services PMI reading since February 2022.
• The Composite PMI, covering both services and manufacturing, declined to 54.3 from 57.1.
• The Composite PMI’s July figure is its weakest since March 2022.

International demand also softened compared to June, although export orders demonstrated faster growth than overall new business. This suggests a nuanced picture within external trade dynamics.

Sectoral Responses and Economic Signals

• Hiring in the services sector saw a modest increase for the seventh consecutive month.
• The pace of job creation picked up from a six-month low observed in June, yet most firms reported no change in headcount.
• Input cost inflation eased for the fourth consecutive month, reaching its lowest point since January.
• Despite easing input costs, companies raised selling prices at the fastest rate in three months, passing on additional pressures.

Business confidence declined for the fourth consecutive month, reaching a seven-month low in July. However, firms maintain optimism regarding future activity, citing expectations of stronger demand and increased tourism.