India’s private sector wrapped up 2025 with a slowdown, as growth in both manufacturing and services lost momentum in December, according to a survey released
on Tuesday. The easing in activity, the softest in ten months, was largely driven by a drop in new orders, reflecting a cooling domestic economy. The HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, slipped to 58.9 in December from 59.7 in November, according to a Reuters report. While still comfortably above the 50-mark that separates expansion from contraction, this represents the weakest pace of growth since February. Analysts point to sluggish new orders as a key factor behind the slowdown, even as exports rose to a three-month high, fueled by demand from markets including the US, UK, and the Middle East. Manufacturing and Services Both Lose Steam The deceleration was particularly noticeable in manufacturing, where the PMI dropped to 55.7 from 56.6, marking the slowest improvement in two years. Services also softened, with the sector’s PMI dipping to 59.1 from 59.8. While output continued to expand, the reduced pace highlights growing caution among businesses as the economy heads into 2026, the report added. Employment Stalls Despite ongoing output growth, job creation stagnated at its weakest level since early 2024. Companies reported that existing staff levels were sufficient to meet current demand, leaving hiring largely on hold. This pause coincides with a third consecutive month of declining business sentiment, reaching its lowest point since July 2022. The services sector, in particular, experienced muted optimism that overshadowed future growth expectations. “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, states the report. Input costs and selling prices rose modestly, while factory output charges eased to their weakest since March. Though this may ease some short-term pressures, it underscores concerns that India’s economic expansion is entering a more challenging phase as 2026 begins.
