June services growth slips to 17-month low

India's dominant services sector expanded at its slowest pace in 17 months in June as domestic demand weakened sharply and overall new business grew at its slowest rate in over two-and-a-half years, according to a survey that also showed hiring nearly stalling. HSBC's India Services Purchasing ‌Managers' Index (PMI), ⁠compiled by ⁠S&P Global, fell to 57.4 last month from May's 59.8, but was slightly higher than a preliminary estimate of 57.3. Readings above 50.0 indicate growth in activity. "The loss of momentum points to more challenging market conditions and weaker demand, particularly at home," said Pranjul Bhandari, chief India economist at HSBC. New business - a key ⁠gauge of ‌demand - rose at the slowest pace since November 2023. International demand offered a partial offset with new export ⁠orders growing at their fastest pace in three months. With demand softening, headcount was barely increased and only around 1% of firms reported taking in additional staff - a marked retreat from strong job creation in April and May. Input cost inflation eased to a five-month low as the price of electricity, food, fuel and transportation rose at a ‌softer pace. Firms passed on less of that burden to clients as the prices charged sub-index fell to a seven-month low. Business confidence ⁠faded to a five-month low with firms citing competition, difficult economic conditions and rupee depreciation as concerns, underscoring broader caution about global trade uncertainty and financial market volatility. The India Composite PMI, which covers both services and manufacturing, slipped to its weakest since March as output, new orders and employment all expanded at softer rates across the private sector and business sentiment hit a five-month low.