India's Service Sector Growth Slows To 11-Month Low In December 2025

(MENAFN- AsiaNet News)

Rates of expansion in incoming new work and output eased to the slowest in 11 months, with companies refraining from recruiting additional staff, HSBC India Services PMI for December 2025, released on Tuesday, has indicated. The PMI reported that firms remained upbeat about growth prospects, but overall sentiment fell to its lowest level in nearly three-and-a-half years.

"Although India's service sector maintained a strong performance in December, several of the survey's measures retreated as 2025 drew to a close. Rates of expansion in incoming new work and output eased to the slowest in 11 months, with companies refraining from recruiting additional staff. Firms remained upbeat towards growth prospects, but overall sentiment fell to its lowest level in nearly three-and-a-half years," the PMI report read.

PMI Index and Inflation Trends

There were quicker increases in input costs and output charges than those registered in the previous month, though rates of inflation remained below their respective long-run averages. The seasonally adjusted HSBC India Services PMI Business Activity Index - based on a single question asking how the level of business activity compares with the situation the month before - fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January. That said, the PMI report noted that the current reading still indicated a substantial rise in output.

Expert Commentary on Growth and Inflation

Pollyanna De Lima, Economics Associate Director at S & P Global Market Intelligence, said, "While India's service sector continued to perform well in December, the retreat in several survey indicators as 2025 ended may suggest a moderation in growth heading into the new year."

What bodes well for the outlook is the benign inflation environment, Pollyanna De Lima said. "If services firms continue to see only mild increases in their expenses, they should be better positioned to compete and limit price hikes, thereby boosting sales and creating more jobs."

Market Concerns and Export Performance

Companies did express some anxiety about market uncertainty and exchange rate movements. While recent rupee weakness may have driven import costs higher, it likely made exports more competitive. Notably, against the wider trend of slowing growth, services exports rose to a greater extent in December.

All in all, Indian services companies were confident of a rise in business activity in 2026, but the overall level of positive sentiment fell for the third straight month to its lowest in close to three-and-a-half years. The respective index was nearly nine points below its long-run average. Heightened market uncertainty and concerns around exchange rate movements dampened optimism, the PMI report noted, citing qualitative data. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

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