India's services PMI eases to 17-month low on weaker domestic demand

India's dominant services sector lost momentum in June as growth eased to a 17-month low on weaker domestic demand and challenging market conditions, a monthly survey said on Friday.

The seasonally adjusted HSBC India Services PMI Business Activity Index fell to 57.4 in June from 59.8 in May.

While the reading remained comfortably above the 50-mark that separates expansion from contraction, it was the lowest since January 2025.

“India's service economy remained firmly inside expansion territory, but the PMI results for June showed a loss of momentum as challenging market conditions and reduced client interest for some services reportedly stymied growth of total sales and output,” the report said.

With demand softening, service providers largely held back on hiring after adding jobs 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," HSBC Chief India Economist Pranjul Bhandari said.

She, however, said external demand remained resilient as "overseas sales stayed robust and growth reached a three-month high", while "price pressures also continued to cool" as geopolitical disruptions in the Middle East began to subside.

The survey showed input cost inflation eased to a five-month low, with firms reporting higher electricity, food, fuel and transport costs, while the increase in prices charged to customers was the weakest since November 2025.

The HSBC India Composite PMI Output Index, which combines manufacturing and services, also moderated to 57.1 in June from 59.3 in May.

Aggregate sales rose at the weakest pace in three months, job creation slowed to its weakest so far this year and overall business confidence slipped to a five-month low.

The survey nevertheless highlighted exports as a bright spot, with companies reporting stronger demand from clients in markets including Australia, Germany, the UAE and the United States.