India's Private Sector Growth Momentum Softens As PMI Hits Lowest Since February

India’s private sector activity eased slightly in December, though growth remained robust, according to data released by S&P Global on Tuesday.

The HSBC Flash India Composite Output Index, which tracks combined activity across manufacturing and services, fell to 58.9 in December from 59.7 in November. While the seasonally adjusted index signalled a slower pace of expansion, it stayed comfortably above the 50 mark that separates growth from contraction.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said the flash PMI closed 2025 on a positive note, marking a year of strong private-sector growth. “Rates of expansion in output and new orders eased in December but remained sharp nonetheless. Firms were helped by inflationary pressures remaining muted as the year drew to a close,” he said, according to Reuters.

The December reading was the softest since February, reflecting weaker growth in new orders — a key indicator of demand — despite an acceleration in new export business to a three-month high, supported by demand from the US, UK, and the Middle East.

The slowdown was more pronounced in manufacturing. The manufacturing PMI slipped to 55.7 from 56.6, indicating the sector’s weakest improvement in health in nearly two years. The services activity index also eased, falling to 59.1 from 59.8, pointing to softer growth in the dominant services sector.

Despite continued expansion in output, employment growth stalled, marking its weakest reading since early 2024. Firms said existing workforce levels were sufficient to manage workloads, leaving staffing largely unchanged.

The pause in hiring coincided with a further drop in business confidence. Overall sentiment declined for a third straight month, hitting its lowest level since July 2022, with the downturn led by the services sector.

Input costs and selling prices rose modestly, while factory output charges eased to their weakest level since March. While softer price pressures may offer some relief, analysts note that the data points to growing concerns that India’s economic momentum could face headwinds heading into 2026.