India Service Sector Plunges to 17-Month Low as Growth Momentum Moderates

India Service Sector Plunges to 17-Month Low as Growth Momentum Moderates​

India’s services activity registered a sharp slowdown in June, falling significantly to 57.4. This reading marks a 17-month low for the sector, down from the stronger performance seen in May when the index stood at 59.8, according to the latest HSBC PMI data analysis. Although a result above 50 still indicates sector expansion, the substantial decline points towards a clear moderation of growth momentum in this crucial pillar of the Indian economy.

Sharp Decline Hits Services Sector​

The June print represents one of the weakest expansions observed in the services sector since January 2025, where the index was recorded at 56.5. The deterioration in services activity suggests that demand conditions have weakened more steeply than previously anticipated by market observers. This pullback contrasts sharply with May’s reading, which had offered renewed hope for sustained growth momentum within the service industry.

Manufacturing Sector Also Experiences Slowdown​

The slowdown was not limited to the service domain; manufacturing also saw a decline in activity. India’s manufacturing PMI eased to 54.2 in June, marking a three-month low from May's reading of 55.0. Both major sectors experienced momentum losses during the month, though services registered a sharper downturn compared to manufacturing. The month-on-month drop for services was 2.4 points, substantially outpacing manufacturing’s decline of 0.8 points.

Analyzing the Divergence and Historical Trend​

The gap between services and manufacturing activities narrowed in June, indicating shared concerns about slowing expansion across key economic areas. Historically, the service sector had demonstrated resilience over much of the past year, including a peak reading of 62.9 witnessed back in August 2025. However, since that high point, momentum has generally trended downward through late 2026 despite intermittent periods of rebound.

Detailed PMI Trends Across Months​

The data illustrates a cooling trajectory across multiple months as the services activity declines. While May saw services activity rise to 59.8 from November’s figure of 59.8, June’s sharp pullback signifies a critical shift in market sentiment. The historic monthly readings show services fluctuating between periods of stability and moderate contraction.