December Services PMI: Growth Moderates, Confidence Dips, Exports Shine
Meanwhile, 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 amid heightened market uncertainty and concerns around exchange rate movements.
New Delhi: India’s services sector expansion slowed to its weakest pace in 11 months in December as the country's new business growth eased and hiring activity stalled. At the same time, international demand offered a bright spot, business confidence declined, reaching its lowest in over three years. A benign inflation environment, however, bodes well for future competition and job creation, a private survey showed on Tuesday.
According to the seasonally adjusted HSBC India services Purchasing Managers' Index or PMI business activity, the index fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. “Firms remained upbeat towards growth prospects, but overall sentiment fell to its lowest level in nearly three-and-a-half years,” the survey said.
Commenting on the survey, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence said that 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.
In terms of external demand, the survey said that monitored companies noted another improvement, with gains from Asia, North America, the Middle East and the UK. New export orders rose at a marked pace. On the price front, there were benign increases in input costs and output charges. “What bodes well for the outlook is the benign inflation environment. 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,” Lima said.
Meanwhile, 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 amid heightened market uncertainty and concerns around exchange rate movements.
“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,” Lima added.
However, India’s private sector continued to record benign increases in both input costs and output charges. “Job creation at the composite level stalled in December, amid a slowdown in growth among goods producers and fractional job shedding at service providers, the survey said, adding that looking ahead, private sector companies remained optimistic towards growth prospects, though the level of sentiment slipped to a 41-month low.
