“While India’s service sector continued to perform well in December, the retreat in several survey indicators as 2025 ended may suggest a moderation in growth heading into the new year,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
Momentum in new business — a key measure of demand — weakened to its slowest pace since January 2025. Although firms continued to report healthy client interest, growth was tempered by intensifying competition, particularly from alternative service providers offering lower-priced options.
Employment conditions deteriorated during the month, ending a 42-month streak of job creation. Companies marginally reduced staffing levels, though the vast majority of respondents (96%) reported no change in their workforce numbers.
Sentiment around future business activity also weakened, with confidence falling for the third month in a row to its lowest level in more than three years. However, new export orders picked up from an eight-month low recorded in November.
On costs, input price inflation edged higher in December compared to the previous month but remained below the long-term average. Output price pressures stayed subdued, with fewer than 3% of surveyed firms increasing their charges.
"What bodes well for the outlook is the benign inflation environment. If services firms continue to see only mild increases in their expenses, they should be better positioned to compete and limit price hikes, thereby boosting sales and creating more jobs," De Lima said.
Reflecting the broader slowdown, HSBC’s India Composite PMI — which includes manufacturing activity — declined to 57.8 in December from 59.7 in November, marking its lowest level in 11 months. Manufacturing output, in particular, expanded at its weakest pace in two years.
