After manufacturing, services sector too showed stress in July as Purchasing Manager’s Index (PMI) dipped to 53.3 as against 57.4 in June, a report by S&P Global showed on Wednesday. Meanwhile, the good news is that hiring has rebounded.Services sector has maximum share, i.e., over 53 per cent in Gross Value Added (GVA). On Monday, manufacturing PMI dropped to nearly 5 years low of 53.5.Manufacturing has a share of over 17 per cent in GVA. Both the indices are derived from responses collected among purchasing executives of 400 companies.“India’s services sector continued to expand in July, albeit at a slightly slower pace, as new business growth eased in both domestic and export markets after several months of strong performance,” said Pranjul Bhandari, Chief India Economist at HSBC.According to the report, business activity rose at the weakest rate in 53 months, as new business inflows increased only moderately amid reports of softer demand, competitive pressures and fewer enquiries. New export business remained a bright spot, with firms citing gains from the UAE, UK and US.“Hiring showed a moderate rebound, while profit margins improved as input costs softened and firms increased their selling prices,” Bhandari said.Adding to this the report said that after sinking to a six-month low in June, there was an improvement in the rate of job creation during July.The uptick was modest, however, as only 6 per cent of firms reported higher payroll numbers and the vast majority (92 per cent) indicated no change.July data highlighted another increase in input costs across the service economy, with panellists signalling greater fuel, labour, material, technology and transportation costs.That said, the rate of inflation was modest, the weakest in six months and below its long-run average. Nevertheless, Consumer Services was at the bottom of the charge inflation rankings, whereas Real Estate & Business Services occupied the top spot.Across the service economy, output prices rose at the quickest pace since April. Hopes of better demand and market conditions, as well as plans to price competitively and forecasts of greater inbound tourism, supported positive sentiment among services companies.That said, “the overall level of confidence slipped to a seven-month low in July,” the report said.Published on August 5, 2026