India’s Services Growth Surges in June: Record Rise in Exports and Job Creation

That is good news for India's economic outlook, already the seventh largest services exporting country globally, according to the Reserve Bank of India.
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A Strong Performance for India’s Services Sector

India’s services industry experienced accelerated growth in June, driven by robust demand and a record increase in export orders. According to a business survey by HSBC, the sector’s expansion has led to the fastest hiring rate seen in nearly two years.

Key Highlights from the PMI Survey

  • HSBC India Services PMI: The Purchasing Managers’ Index (PMI) for India’s services sector, compiled by S&P Global, rose to 60.5 in June from 60.2 in May. This is close to the Reuters poll median forecast of 60.6 and a preliminary reading of 60.4. The PMI has been above 50 for nearly three years, indicating continuous growth.
  • Demand and New Orders: The increase in activity was fueled by a surge in both domestic and international new orders. Pranjul Bhandari, chief India economist at HSBC, noted, “Activity growth in India’s service sector accelerated in June … led by an increase in both domestic and international new orders.” New business has remained above the breakeven point since August 2021 and saw an even faster expansion last month, supported by the highest rise in international orders since the sub-index was introduced nearly a decade ago.

Economic Implications

This growth is promising for India’s economic outlook. As the seventh-largest services exporting country globally, according to the Reserve Bank of India, India’s strong performance in the services sector bodes well for its overall economic health. The country posted a faster-than-expected growth rate of 7.8% in the January-March quarter, though it is anticipated to slow modestly this fiscal year.

Job Creation and Business Sentiment

  • Employment: The robust demand encouraged service providers to increase their workforce. The rate of job creation in June was the strongest since August 2022, extending the current growth stretch in hiring to over two years.
  • Business Sentiment: Despite the overall positive sentiment, confidence for the coming year dipped to an 11-month low due to concerns about market uncertainty and competition. Bhandari added, “Overall, service providers remain confident about the year-ahead business outlook, although the level of optimism moderated sharply during the month.”

Inflation and Cost Management

The survey indicated a cooling in inflation as costs rose at the slowest pace in four months. Fewer than 5% of firms chose to pass on cost burdens to clients, resulting in only a moderate increase in charges. A Reuters poll suggests that inflation might fall below the RBI’s medium-term target of 4% this quarter, before picking up again in the next. However, the central bank is expected to cut interest rates to 6.25% by year-end.

Composite PMI

The overall HSBC India Composite PMI, which includes both manufacturing and services, increased to 60.9 in June from 60.5 in May, matching the flash estimate.


The growth in India’s services sector, highlighted by the PMI survey, underscores the country’s strong economic performance and resilience. With robust demand, increased hiring, and controlled inflation, India is poised to maintain its growth trajectory, even as it navigates market uncertainties and competitive pressures.

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