The pace of business growth in India slowed to a ten-month low in December, but overall activity in the private sector remained strong, according to the latest HSBC PMI data.
The HSBC Flash India Composite Output Index, which combines the output of India’s manufacturing and service sectors, slipped to 58.9 in December from 59.7 in November.
Despite the decline, the reading remained well above the 50-mark, which shows that business activity is still growing.
Private sector growth softens to 10-month low
HSBC stated, “The index was down from 59.7 in November and pointed to the softest output growth since February.” However, the reading signal a steep expansion across the private sector. At the same time, the rate of expansion eased compared to the previous month. Growth in new orders also slowed towards the end of the year, but it remained at a healthy level.
Manufacturing and services see softer growth in December
Softer growth was seen across both manufacturing and services as the year ended. The services business activity index eased to 59.1 in December from 59.8 in the previous month, while the manufacturing output index fell to 58.4 from 59.6.
The data further pointed out that companies largely kept their staffing levels unchanged in December. This means that businesses neither hired many new workers nor reduced jobs significantly.
Business confidence also softened further, showing that companies are becoming a little more cautious about the future. Inflation pressures remained muted, indicating that costs were not rising sharply.
HSBC Manufacturing PMI slips to 55.7
Growth in the manufacturing sector also moderated in December, with slower increases seen in both output and new orders. Employment growth and stocks of purchases rose at a more subdued pace, while suppliers’ delivery times shortened further, pointing to improved supply conditions.
Reflecting these trends, the HSBC Flash India Manufacturing PMI fell to 55.7 in December from 56.6 in November.
The latest reading marked the weakest improvement in manufacturing sector health in nearly two years. However, the index remained well above its long-term average, indicating that manufacturing activity continued to expand at a robust pace.
Outlook for 2026 remains positive, but optimism softens
Looking ahead to 2026, HSBC stated that the companies remain confident that business growth will continue. However, optimism has been weakening. Business sentiment fell for the third straight month in December and dropped to its lowest level since July 2022.
Overall, the HSBC PMI data suggests that while India’s business growth slowed a bit in December, the economy remains on a strong growth path.