18 of 19 services sub-sectors expanded in June, signalling broad-based momentum, while air transport remained the only sector in contraction
New Delhi : India’s services sector recorded broad-based growth in June, with 18 of 19 sub-sectors reporting expansion, compared with 16 in May, according to the third print of the trial Index of Services Production (ISP) released by the National Statistics Office (NSO) on Monday.
The data indicates that the recovery in services activity is becoming more widespread, although the pace of growth varied significantly across sectors. Air transport was the only sub-sector to remain in contraction, while real estate emerged as the fastest-growing segment during the month.
Real Estate Leads Services Growth
Real estate recorded the strongest growth among the 19 services sub-sectors, expanding 24.7% in June, sharply higher than the 17.7% growth recorded in May.
Other major sectors also posted strong performances:
- Retail trade: 18%
- Wholesale trade: 15.1%
- Administrative and support services: 14.4%
- IT and computer-related services: 13.5%
- Banking: 11.4%
- Accommodation and food services: 10.2%
Overall, eight services sub-sectors registered double-digit growth in June, the same number as in May, although this was lower than the 14 sectors that recorded double-digit growth in April.
Wholesale and Retail Trade Gain Momentum
Several major components of the services economy accelerated during June.
Wholesale trade grew 15.1%, compared with just 3.7% in May. Administrative and support services also recorded a substantial improvement, with growth accelerating to 14.4% from 5% in the previous month.
Retail trade expanded 18%, up from 13.3% in May, indicating continued strength in consumer-facing business activity.
The improvement across these segments suggests that domestic demand and business activity remained important drivers of services-sector growth.
Postal and Information Services Return to Growth
Two sectors that had contracted in May returned to positive growth in June.
Postal and courier services moved from a 1% contraction in May to 5% growth in June. Meanwhile, information and broadcasting services recovered from a 7.6% contraction to record 4.6% growth.
The turnaround in these segments contributed to the broader expansion in the services economy.
Air Transport Remains Under Pressure
Air transport continued to be the only services sub-sector in contraction for the third consecutive month.
The pace of contraction actually widened in June, with activity declining 6%, compared with a 2.8% contraction in May.
The continued weakness in air transport stands in contrast to the stronger performance recorded by most other services categories and remains a notable area of weakness in the latest data.
Accommodation and Food Growth Slows Sharply
While accommodation and food services remained firmly in expansion territory, the sector experienced a significant slowdown.
Growth fell to 10.2% in June from 27.4% in May. Despite the moderation, the sector continued to maintain the highest index level among the services categories, at 141.2.
Retail trade followed with an index level of 138, while road transport stood at 131.6.
At the lower end, air transport recorded an index level of 91.2, followed by postal and courier services at 103.2 and railway transport at 105.5.
Telecommunications and Banking Moderate
Some sectors continued to grow but lost momentum compared with May.
Telecommunications growth eased to 9.5% from 11.8%, taking the sector below the double-digit growth mark.
Banking activity also moderated slightly, with growth slowing to 11.4% from 12.1% in May.
The moderation, however, remained relatively limited and both sectors continued to contribute positively to overall services activity.
Eight Sectors Record Double-Digit Growth
The eight sub-sectors that recorded growth of more than 10% in June were:
- Wholesale trade
- Retail trade
- Accommodation and food services
- Warehousing and support activities for transportation
- Banking
- Real estate
- IT and computer-related services
- Administrative and support services
The broad distribution of growth across trade, finance, technology, real estate and business services points to a relatively diversified expansion in the sector.
Trial Index Provides High-Frequency Services Data
The trial Index of Services Production (ISP) uses 2024-25 as its base year and covers nearly 60% of India’s total services output.
The index is significant because it provides the country’s first high-frequency monthly indicator specifically designed to track services-sector activity. Until now, policymakers and analysts have largely relied on other economic indicators, including the Index of Industrial Production (IIP), to assess monthly changes in economic activity.
The ISP is therefore expected to provide additional insight into the direction and momentum of India’s services economy.
Broad-Based Growth Supports Economic Outlook
The June data shows that services-sector expansion is becoming broader, with 18 of 19 sub-sectors registering growth. Strong performances in real estate, retail, wholesale trade, IT services, banking and administrative activities point to continued resilience in domestic economic activity.
However, the sharp slowdown in accommodation and food services, moderation in telecommunications and banking, and continued contraction in air transport indicate that growth remains uneven across individual segments.
Overall, the latest ISP reading suggests that India’s services economy maintained strong momentum in June, supported by broad-based expansion across consumer, business, financial and technology-related services.
