Economic Buzz: India private sector output growth recedes to 11-month low in December

The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January. That said, the current reading was still indicative of a substantial rise in output. In a similar vein, inflows of new work rose at an above-trend pace albeit one that was the least pronounced in 11 months.

Although India's service sector maintained a strong performance in December, several of the survey's measures retreated as 2025 drew to a close. Rates of expansion in incoming new work and output eased to the slowest in 11 months, with companies refraining from recruiting additional staff.

Firms remained upbeat towards growth prospects, but overall sentiment fell to its lowest level in nearly three-and-a-half years. There were quicker increases in input costs and output charges than those registered in the previous month, though rates of inflation remained below their respective long-run averages.

The latest results showed another sharp increase in private sector activity across India, though the pace of expansion eased to the weakest since January 2025 amid slowdowns at both manufacturers and service providers.

Despite falling from 59.7 in November to 57.8 in December, the HSBC India Composite PMI Output Index was well above its long-run reading of 55.0.

A similar picture was painted for new orders, with growth losing momentum at goods producers and services firms. The aggregate pace of expansion softened to a 25-month low.

India's private sector continued to record benign increases in both input costs and output charges. Rates of inflation were broadly similar and below their respective long-run averages.

Job creation at the composite level stalled in December, amid a slowdown in growth among goods producers and fractional job shedding at service providers. Looking ahead, private sector companies remained optimistic towards growth prospects, though the level of sentiment slipped to a 41-month low.

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