On the job front, after sinking to a six-month low in June, there was an improvement in the rate of job creation during July.
| Photo Credit: AFP
India’s services sector growth fell to a four-and-a-half-year low in July as new business orders eased in both domestic and export markets, constrained by fierce competition and fading demand, a monthly survey said on Wednesday (August 5, 2026).
Business activity rose at the weakest rate in 53 months, as new business inflows increased moderately amid reports of softer demand and competitive pressures.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 57.4 in June to 53.3 in July, registering the weakest growth rate in close to four-and-a-half years.
The seasonally adjusted HSBC India Services PMI Business Activity Index – based on a single question asking how the level of business activity compares with the situation the month before – remained above the neutral mark of 50 and therefore signalled another expansion in output.
“India’s services sector continued to expand in July, albeit at a slightly slower pace, as new business growth eased in both domestic and export markets after several months of strong performance,” said Pranjul Bhandari, chief India economist at HSBC.
New business inflows expanded at a moderate pace, the slowest since February 2022.
According to panel members, growth was constrained by fierce competition, fading demand, softer market conditions and order postponements.
On the job front, after sinking to a six-month low in June, there was an improvement in the rate of job creation during July. The uptick was however, modest, as only 6% of firms reported higher payroll numbers and the vast majority (92 per cent) indicated no change.
“Hiring showed a moderate rebound, while profit margins improved as input costs softened and firms increased their selling prices,” Mr. Bhandari said.
On the prices front, July data highlighted another increase in input costs across the service economy, with panellists signalling greater fuel, labour, material, technology and transportation costs.
Meanwhile, new export business remained a bright spot, with firms citing gains from the UAE, U.K. and U.S. Also, service providers continued to add to their payrolls.
On business confidence, the survey said that hopes of better demand and market conditions, as well as plans to price competitively and forecasts of greater inbound tourism, supported positive sentiment among services companies. The overall level of confidence, however, slipped to a seven-month low in July.
Meanwhile, the HSBC India Composite PMI Output Index fell from 57.1 in June to 54.3 in July, indicating the weakest pace of expansion since March 2022.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.
There was a particularly sharp slowdown in the service economy, while factory production growth ticked marginally higher.
Regarding employment, stronger growth in the service economy more than offset a slowdown in manufacturing and contributed to faster job creation at the composite level.
The rate of input cost inflation across the private sector eased to a six-month low, but selling charges rose at the fastest pace since April.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
Published – August 05, 2026 10:20 pm IST
