New Delhi: The Indian services sector growth touched a ten-month high in June aided by robust expansion in international sales and job creation, amid positive demand trends and ongoing improvement in sales, a monthly survey said on Thursday.

The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 58.8 in May to 60.4 in June, driven by sharp upturn in new business orders.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

"The Services PMI business activity index was up to a ten-month high, led by a sharp rise in new domestic orders. New export orders also expanded, albeit at a softer pace. Margins improved, as the rise in input costs was below that seen for output charges," Pranjul Bhandari, Chief India Economist at HSBC, said.

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New orders expanded at the quickest rate since August 2024. Services companies benefited most from the continued strength of the domestic market, alongside a marked increase in new export business.

Overseas demand particularly improved from the Asian, Middle Eastern and US markets, according to panel members.

The ongoing expansion of the Indian service sector had a positive impact on recruitment. Employment rose for the 37th consecutive month in June, with the rate of job growth outpacing its long-run average despite slowing from May's record.

On the price front, the survey said, cost pressures were most intense in the consumer services category, while the fastest upturn in output charges was noted in the finance and insurance segment.

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As per the survey, optimism regarding the outlook for output levels in one year time was sustained, with 18 per cent of service providers forecasting growth. This proportion of upbeat firms was, however, the lowest since mid-2022. Hence, the overall level of confidence fell and was below its long-run average.

"Service providers remained optimistic about future growth, though their confidence faded a tad," Bhandari added.

Meanwhile, the HSBC India Composite PMI Output Index rose from 59.3 in May to 61 in June, indicating the fastest rate of expansion in 14 months.

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.

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As per the survey, prices charged by private sector companies rose at the slowest pace in three months at the end of the first fiscal quarter. Concurrently, cost burdens increased at the weakest rate since August 2024. For both indicators, slowdowns were broad-based across the manufacturing and service economies.

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.

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