India’s services sector growth slowed to its weakest pace in 11 months in December, as softer new business inflows and stalled hiring weighed on activity, according to a survey released on Tuesday.
HSBC’s India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 58.0 in December from 59.8 in November. The reading was also below an earlier estimate of 59.1. A PMI figure above 50 signals expansion, while a reading below that level indicates contraction.
Despite the slowdown, overall conditions in the services sector remained solid. Pollyanna De Lima, associate director at S&P Global Market Intelligence, said that while activity stayed strong, the pullback in several indicators toward the end of 2025 points to a possible moderation in growth as the new year begins.
New business growth, a key measure of demand, eased to its slowest pace since January 2025. Firms continued to report healthy client interest, but rising competition from lower-cost service providers limited the pace of expansion.
Employment conditions weakened during the month, ending a 42-month run of job growth. Companies slightly reduced staffing levels overall, although 96% of surveyed firms reported keeping their workforce unchanged.
Business sentiment also deteriorated. Confidence about future activity fell for a third straight month, reaching its lowest level in more than three years.
International demand offered some support, with new export orders accelerating after hitting an eight-month low in November.
On pricing, input costs rose at a moderate pace in December. While the increase was faster than in November, it remained below the long-term average. Output price inflation stayed subdued, with fewer than 3% of firms reporting higher charges.
De Lima noted that the relatively calm inflation backdrop supports the outlook. She added that if service providers continue to face only mild cost pressures, they should be better placed to stay competitive, limit price increases, and potentially boost sales and hiring.
Meanwhile, HSBC’s India Composite PMI, which also includes manufacturing activity, dropped to 57.8 in December from 59.7 in November. Manufacturing growth slowed to its weakest pace in two years, pulling the composite index to an 11-month low.
