India’s services PMI drops to 17-month low of 57.4 in June 2026 as demand softens

Activity in India’s services sector eased to its lowest level in 17 months, according to a private sector survey, driven by the weakest growth in new order intakes in over two-and-a-half years.

The HSBC India Services PMI Business Activity Index eased to 57.4 in June from 59.8 in May. While the reading remained comfortably above the neutral 50-mark that separates expansion from contraction, and above its long run average, it marked the slowest upturn since January 2025, the report noted.

“The loss of momentum points to more challenging market conditions and weaker demand, particularly at home,” said Pranjul Bhandari, Chief India Economist at HSBC.

Exports bucked the trend

New export orders rose at their fastest pace in three months, with firms citing stronger demand from markets including Australia, Germany, Singapore, the UAE and the U.S., offering a rare pocket of momentum in an otherwise cooling month.

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At home, companies pointed to intensifying competition and reduced client interest as the main drag, even as some units reported gains from competitive pricing, stronger ecommerce demand, higher customer bookings and improved local tourism.

With payrolls seen as sufficient for current workloads, hiring was largely paused in June, a sharp pullback after solid job creation in April and May.

Price pressures eased further, helped in part by receding geopolitical disruption in West Asia. Input costs rose at their slowest pace in five months, even as firms flagged higher electricity, food, fuel and transportation prices, the report said.

Broadbased slowdown

India’s Composite PMI Output Index, which combines manufacturing and services activity, fell to 57.1 in June from 59.3 in May, its weakest expansion since March 2026, which was the first full month following the start of the West Asia conflict.

“India’s composite PMI fell slightly to 57.1 in June from 59.3 in May, alongside softer sales volumes, slower job creation and more subdued pricing,” Ms. Bhandari added.

Business confidence slipped to a five-month low, with firms citing competition, economic headwinds and rupee depreciation as risks. Even so, most service providers still expect equipment upgrades, marketing pushes and new client enquiries to drive growth over the coming year.