New Delhi, July 3 : India's services sector continued to expand in June, with the services PMI coming in at 57.4 amid softer domestic demand, according to the HSBC India Services PMI data released on Friday.

The latest reading remained well above the neutral 50 mark, signalling continued growth in business activity, according to the PMI data.

Companies also reported support from competitive pricing, stronger e-commerce demand, higher customer bookings and improved local tourism.

However, the moderation in output growth was accompanied by the slowest increase in new business in over two-and-a-half years, as some firms cited challenging market conditions and reduced client interest.

"India's services PMI remained in expansionary territory but eased to 57.4 in June. The loss of momentum points to more challenging market conditions and weaker demand, particularly at home. Even so, external demand held up well as overseas sales stayed robust and growth reached a three-month high," said Pranjul Bhandari, Chief India Economist at HSBC.

The PMI data further showed that overseas demand remained a bright spot, with new export orders growing at the fastest pace in three months, supported by improved demand from markets including Australia, Canada, Germany, the UAE and the US.

Hiring activity remained largely unchanged during the month as firms indicated that staffing levels were sufficient following strong recruitment in April and May.

Business confidence moderated, although companies continued to expect growth over the coming year, supported by new client enquiries, marketing efforts and technology investments.

Additionally, the data also pointed to easing inflationary pressures, with input cost inflation falling to a five-month low and output price inflation moderating to its weakest level since November 2025.

The broader private sector also remained in expansion territory.

The HSBC India Composite PMI Output Index came in at 57.1 in June, indicating continued growth across manufacturing and services, according to the data.

/IANS