Source Reuters
NEW DELHI, December 16, 2025 — India’s private sector activity expanded at its slowest pace in ten months in December, according to the latest Purchasing Managers’ Index (PMI) data, signaling a cooling of domestic demand and a concerning near-stagnation in the job market.
The HSBC Flash India Composite Output Index, compiled by S&P Global, fell to 58.9 in December, down from 59.7 in November. While any reading above the 50-mark indicates expansion, the decline marks the softest growth rate since February 2025.
Key Drivers of the Slowdown
The moderation in overall activity was primarily driven by a slowdown in new orders, a key gauge of demand, affecting both major sectors:
Services Sector: The Flash Services PMI Business Activity Index eased slightly to 59.1 from 59.8.
Manufacturing Sector: The slowdown was more pronounced in the goods-producing sector. The Flash Manufacturing PMI fell to 55.7 from 56.6, marking the smallest improvement in the sector’s health in two years.
“The deceleration suggests that while the Indian economy remains on a strong growth path, the momentum is easing from the highs seen earlier in the year,” noted an economist from S&P Global Market Intelligence.
Hiring Comes to a Near-Standstill
Perhaps the most worrying trend is the near-stagnation of employment. The survey’s employment index fell to its weakest level since early 2024, hovering barely above the no-change mark of 50.
Companies across both manufacturing and services sectors indicated that current workforce numbers were generally sufficient to manage new order inflows, leading to staffing levels being left broadly unchanged.
Business confidence also took a hit, falling for the third consecutive month to its lowest level since July 2022, suggesting businesses are adopting a more cautious outlook on future prospects.
Bright Spot: Export Orders
Despite the domestic slowdown, there was a silver lining in international demand. New export business accelerated to a three-month high, driven by stronger demand from regions including the US, the UK, and the Middle East. This surge in external orders helped cushion the overall drop in the composite index.
Inflation Remains Muted
On the price front, inflationary pressures remained subdued. Input costs increased only modestly, and output prices saw the second-slowest rise in nine months, offering some relief to businesses.
However, the combined evidence of slower new order growth and stalled hiring reinforces concerns that the cooling domestic demand could pose a challenge to India’s overall economic expansion as it heads into 2026.
