India’s services sector recorded its fastest growth in ten months during June 2025, driven by a surge in both domestic and international demand. The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S\&P Global, rose to 60.4 in June from 58.8 in May. A score above 50 indicates expansion, and this latest reading reflects the strongest rate of growth since August 2024.

The broader HSBC India Composite PMI, which combines both services and manufacturing activities, climbed to 61.0 in June, marking the highest level in 14 months. This growth was fueled by robust momentum in both sectors, with manufacturing also showing significant strength, supported by record export orders and strong hiring.

According to the survey, new business in the services sector increased at the fastest pace since last August. Export orders also continued to grow, supported by demand from key regions such as Asia, the Middle East, and the United States. Although export growth eased slightly compared to May, it remained one of the best performances in over a year.

Employment in the services sector continued to grow, although the pace slowed from the previous month’s record. Meanwhile, input cost inflation fell to a ten-month low, primarily due to a moderation in supplier charges. Companies noted that while staff wages had increased, overall cost pressures had eased. Despite this, output price inflation—reflecting the prices charged to customers—slowed and remained close to the long-run average.

Despite the robust expansion, the survey noted a significant drop in business confidence. Sentiment among service providers fell to its weakest level in over two years, suggesting lingering caution about the long-term sustainability of the current growth momentum.

The strong performance in services aligns with recent data from the manufacturing sector, where output surged and hiring reached its highest pace in more than two decades. In combination, these factors have contributed to a strong private-sector expansion across India.

Analysts note that the easing of cost pressures and continued job creation are positive signals for the broader economy. However, the weakening business sentiment indicates that companies remain cautious amid global uncertainties and potential external shocks.

The June PMI data suggests that India's private sector is experiencing a phase of solid and broad-based growth. As inflation pressures ease and domestic demand remains resilient, businesses are expected to benefit from continued expansion. However, maintaining this momentum will depend on improved confidence and stable external conditions.