Service sector drag weighs on India’s PMI despite manufacturing resilience

Mumbai, July 24 – The latest flash PMI for India’s private sector fell to 54.3 in July, reflecting a slowdown in overall activity. The decline is largely driven by the services segment, where the business‑activity index dropped to 53.1, its lowest point in 53 months, amid weaker demand and fewer client inquiries.

Manufacturing showed more resilience, with its core PMI easing to 53.9, the lowest in four months, while the output index rose to 57.0, suggesting factories are maintaining production levels despite rising costs. Export demand remains a bright spot, keeping the manufacturing side of the economy buoyant.

HSBC’s India economist Pranjul Bhandari said heightened geopolitical risks in the Middle East have prompted firms to hold higher inventories, pushing up both finished‑goods and raw‑material stocks. The combined effect of higher prices and tighter margins is prompting companies to adjust pricing strategies to safeguard profitability.