India’s Services Sector Hits 11-Month High in July 2025

India’s services sector surged to an 11-month high in July 2025, bolstered by robust international demand and steady domestic sales, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) by S&P Global. The report underscores a continued expansion in one of India’s most vital economic segments, signaling strong momentum despite inflationary pressures and subdued hiring.

PMI at 60.5: A Sign of Steady Growth

The Services PMI rose to 60.5 in July from 60.4 in June, surpassing the preliminary estimate of 59.8. This marks the sector’s 48th consecutive month of growth, with any PMI figure above 50 indicating expansion. This growth reflects sustained momentum in both domestic consumption and global service exports, vital for India’s post-pandemic economic stability.

International Demand Drives Momentum

A standout from the report is the sharp rise in the new export business sub-index, which recorded its second-strongest performance in a year. This indicates a surge in international demand for Indian services, especially in sectors like finance, insurance, and IT.

Sector Performance Breakdown

• Top Performer: Finance and Insurance led in both new orders and overall activity, showing resilience amid economic uncertainties.
• Slower Sectors: Real estate and business services witnessed the slowest growth, likely due to tighter budgets and delayed investment decisions.

Hiring and Inflation Trends

Despite strong business activity, employment growth dipped to a 15-month low, suggesting caution among service providers amid rising costs. Firms reported higher input costs for food, freight, and labor. Many passed these costs onto consumers, with output price inflation slightly outpacing input cost growth. Rising inflation could influence the Reserve Bank of India’s (RBI) monetary policy stance, especially as it balances growth and price stability.

Monetary Policy Outlook

The RBI is expected to hold its repo rate steady at 5.50% during its August 4–6 meeting. However, a rate cut may be on the horizon next quarter, depending on inflation trends and economic data, as per a Reuters poll.

Positive Business Sentiment

Looking ahead, business confidence improved in July. Service providers anticipate benefits from,

• Marketing campaigns
• Technological innovations
• Expanding online presence

This optimism could support future investment and productivity gains, essential for sustaining long-term growth.