India private sector growth hits 10-month low in December, hiring stalls, PMIs show

BENGALURU: India’s private sector activity expanded at its weakest pace in 10 months in December on a slowdown in new orders and hiring slowed to a near-standstill, according to a survey of private businesses on Tuesday.

The data suggest growth in India’s third-largest economy remains strong but is slowing from the 8.2% growth reported in the latest quarter, and reinforce the view overall that inflation pressures remain weak.

HSBC’s Flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 58.9 this month from 59.7 in November, marking the lowest reading since February. The 50 mark separates growth from contraction.

The slowdown came from a drag exerted by weaker growth in new orders - a key gauge for demand - and despite new export business accelerating to a three-month high.

Moderation was notable in the goods-producing sector, with expansion slowing to its weakest rate in two years.

India’s November business growth slows to 6-month low on weak manufacturing, PMI shows

The Flash Manufacturing PMI fell nearly one point to 55.7 from 56.6. The equivalent Services PMI dipped more modestly to 59.1 from 59.8.

Despite the expansion in output, the employment index fell to its weakest since early 2024, barely above the 50 mark.

“Anecdotal evidence from companies across both manufacturing and services suggested that their current workforce numbers were generally sufficient to keep on top of new order inflows,” S&P Global wrote in a release.

“As a result, employment levels were left broadly unchanged in December, with the fractional increase in workforce numbers the least marked since February 2024. Manufacturing staffing levels were up marginally, while services employment was broadly stable.”

The hiring pause reflected a dip in optimism, with business sentiment dropping for a third consecutive month to its lowest since July 2022. The decline was centred mainly in the service sector.

Both input costs and selling prices rose modestly, with rises in output charges at factories easing to their weakest since March.

“Firms were helped by inflationary pressures remaining muted as the year drew to a close,” said Andrew Harker, economics director at S&P Global Market Intelligence.