The Indian service sector experienced a notable boost in business activity during July, fueled by strong demand and increased investments in technology and online services, according to the latest HSBC India Services Business Activity Index. The seasonally adjusted index, compiled by S&P Global, registered a score of 60.3 in July, a slight decrease from June’s 60.5, but still well above the neutral mark of 50.0. This marks the thirty-sixth consecutive month of expansion.
The HSBC report attributes the growth to investments in technology, enhanced online offerings, and robust demand. New orders expanded at a historically sharp pace, reflecting continued optimism among service firms. Approximately 30% of survey respondents anticipate higher output volumes over the next year, while only 2% foresee a decline.
“Service sector activity rose at a slightly slower pace in July, with new business increasing further, primarily driven by domestic demand. Looking ahead, services firms remain optimistic about the outlook for the year ahead,” said Pranjul Bhandari, Chief India Economist at HSBC.
International sales also experienced significant growth, with export orders expanding at the third-fastest rate in nearly a decade. Key markets for Indian exports included Austria, Brazil, China, Japan, Singapore, the Netherlands, and the US.
Employment levels rose at one of the strongest rates in nearly two years, with firms hiring both full- and part-time staff to meet increased demand. Despite the robust job creation, backlog volumes continued to rise moderately, indicating sustained demand.
However, businesses faced higher operational costs, with notable increases in wages and material expenses. The report highlighted that costs for items such as eggs, meat, and vegetables contributed to an overall rise in business expenses. Although cost inflation accelerated since June, it remained below the long-term average.
