India's Business Activity Slows in December, PMI Hits 58.9

Business activity in India experienced a slowdown in December 2025, with the HSBC Composite Purchasing Managers' Index (PMI) indicating a drop to 58.9, down from November's figure of 59.7. Despite this decline, the index remains above the neutral mark of 50.0, suggesting that the economy continues to expand, albeit at a reduced pace. According to HSBC, this marks the softest growth rate observed since February 2025.

The decrease in the PMI is attributed to slower growth in both the manufacturing and service sectors. New orders, which are vital for future production, increased at a more moderate rate, although they remained robust due to positive customer demand, as reported by ANI citing HSBC data.

The HSBC Flash India Composite Output Index reflects the health of the private sector in the final month of 2025, showing that while business activity is still strong, it has slowed compared to the previous month. The report highlighted that December witnessed minimal changes in employment numbers, indicating stability in workforce levels with no significant hiring or layoffs observed.

Businesses have expressed caution regarding future growth, as indicated by a decline in business confidence. Inflation remains subdued, contributing to stable cost conditions. The manufacturing sector specifically recorded a moderation in growth, with reductions noted in both output and new orders. Employment expansion and inventory purchases also slowed, although improvements in suppliers' delivery times suggest enhanced supply chain efficiency.

The HSBC Flash India Manufacturing PMI fell to 55.7 in December, down from 56.6 in November. While manufacturing activity still demonstrates solid expansion above the long-term average, the latest figures reflect the weakest improvement in the sector's health in two years.

Looking ahead to 2026, HSBC's report reveals that firms are optimistic about continued growth. However, confidence levels have declined for three consecutive months, reaching their lowest point since July 2022. Despite the slowdown in business growth observed in December, the overall economic momentum in India remains robust, according to the PMI findings.