India’s service sector activity expanded at the slowest pace in nearly a year in December as output and new orders logged softer increases, final data compiled by S&P Global showed on Tuesday.
The seasonally adjusted HSBC India Services PMI dropped to 58.0 in December from 59.8 in November. The flash score was 59.3. Nonetheless, a score above 50.0 indicates expansion.
Both output and new orders grew at the weakest pace in eleven months. The overall growth in both cases was supported by competitive pricing, demand buoyancy, and positive client interest. On the other hand, the expansion was curbed by a greater presence of alternative providers and cheaper services offered elsewhere.
New export orders rose at a faster pace than in November amid more client demand from Asia, North America, the Middle East, and the UK.
Employment in the Indian service sector logged a renewed decline, and one factor that prevented firms from recruiting additional staff was a lack of pressure on their operating capacities.
On the price front, input price inflation accelerated in December, linked to higher costs for building items, chemicals, medical supplies, salaries, vegetables, and office maintenance fees. Selling prices also increased slightly.
Looking ahead, service companies remained confident about growth prospects in 2026, but overall sentiment fell to its lowest level in nearly three-and-a-half years due to heightened market uncertainty and concerns around exchange rate movements.
The composite output index dropped to 57.8 in December from 59.7 in November, indicating the weakest expansion in the Indian private sector activity in almost a year amid slowdowns at both manufacturers and service providers.
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