India’s Services Sector Hits 11-Month High in July on Strong Global and Local Demand

India’s services sector grew at its fastest pace in 11 months in July 2025, as the HSBC India Services PMI rose to 60.5, slightly above June’s 60.4. A PMI score above 50 shows business activity is expanding, and this steady rise signals strong momentum in the sector.

A big reason for this growth was a surge in export demand, especially from countries like Asia, Europe, the UAE, Canada, and the U.S.. The export sub-index hit its second-best level in a year, showing that international clients are seeking more Indian services. On the home front, strong domestic sales and new client onboarding, helped by marketing and digital reach, added to the growth.

Among industries, finance and insurance firms performed the best, leading in new orders and business activity. However, real estate and business services did not grow as quickly. At the same time, companies saw a rise in input costs, mainly due to higher food, freight, and labor expenses. But many firms were able to raise prices more than their costs, showing strong customer demand and pricing power.

One concern is slower hiring. Job growth was the lowest in 15 months, with less than 2% of firms hiring new staff in July. This shows companies may be cautious about expanding their teams, even though business is strong.

Still, business confidence stayed high. Many firms are becoming more efficient, using technology and digital tools to grow without adding many new workers. This trend shows how companies are focusing on innovation and productivity rather than just increasing headcount.

Overall, the rise in the services PMI points to strong demand from both global and local markets. But with costs rising and hiring slowing, companies may stay careful in the near term. This data is also important for the RBI, which tracks such trends when deciding on interest rates.

Also, the Composite PMI, which includes both services and manufacturing, reached 61.1 in July, the highest since April 2024, signaling broad strength in India’s private sector.