By Anant Chandak
BENGALURU, Dec 16 (Reuters) - India's private sector activity ended the year on a sombre note, expanding at its weakest pace in ten months in December as a slowdown in new orders took the steam out of both the manufacturing and services sectors, a survey showed on Tuesday.
While the economy remains in expansionary territory, the deceleration coupled with a near-stagnant job market indicates domestic demand is cooling, dragging overall momentum down from the highs seen earlier in 2025.
HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 58.9 this month, down from 59.7 in November. Although the reading remains comfortably above the 50-mark separating growth from contraction, it represents the softest activity since February.
This was due to the drag exerted by weaker growth in new orders - a key gauge for demand - and came despite new export business accelerating to a three-month high on demand from key markets like the U.S., UK, and the Middle East.
The moderation was particularly acute in the goods-producing sector, where the industry's health improved at its slowest rate in two years. Manufacturing PMI slid to 55.7 from 56.6. The services activity index dipped to 59.1 from 59.8, reflecting softer growth in the dominant sector.
Despite the expansion in output, employment generation stalled at its weakest since early 2024. Companies reported current workforce numbers were sufficient to handle the workload, leaving staffing levels broadly unchanged.
This hiring pause reflects a sharp dip in optimism, with business sentiment dropping for a third consecutive month to its lowest level since July 2022. The decline was centred in the service sector, where muted optimism at year-end overshadowed expectations of future growth.
"Firms were helped by inflationary pressures remaining muted as the year drew to a close," said Andrew Harker, economics director at S&P Global Market Intelligence.
Both input costs and selling prices rose modestly with output charges at factories easing to their weakest since March. This may provide some relief, but it does little to mask the growing concerns that India's economic expansion is entering a challenging phase heading into 2026.
(Reporting by Anant ChandakEditing by Shri Navaratnam)
