India's services sector growth declines to 11-month low in December
What's the story
India's services sector growth slowed down to an 11-month low in December, a recent survey by S&P Global has revealed. The HSBC India Services Purchasing Managers's Index (PMI) fell from November's 59.8 to 58 last month, missing a preliminary estimate of 59.1. Despite the decline, the index remains well above the neutral mark of 50 that separates expansion from contraction.
Economic indicators
New business growth and hiring trends
The slowdown in December was mainly due to a decline in new business growth, a key indicator of demand. The rate of new orders grew at its slowest pace since January 2025, with competition from alternative providers offering cheaper services moderating growth. Hiring also took a hit as the 42-month hiring streak ended last month with firms marginally reducing staffing levels.
Market outlook
Business confidence and international demand
Business confidence regarding future activity declined for the third consecutive month, hitting a three-year low. However, international demand provided a glimmer of hope as new export orders picked up from November's eight-month low. 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 may suggest moderation heading into the new year.
Economic forecast
Inflation and future outlook
On the inflation front, input costs rose moderately in December, faster than November but still below the long-term trend. Output price inflation remained weak with less than 3% of surveyed firms raising their fees. De Lima said a benign inflation environment bodes well for the outlook as it would help services firms remain competitive and limit price hikes, boosting sales and creating more jobs.