India's Services PMI Business Activity Index slipped to 58.0 in December from 59.8 in November.
This marks the slowest expansion in 11 months.
After more than two years of steady job creation, hiring stalled in December.
India’s private sector ended 2025 on a softer footing, with growth losing some momentum as demand moderated and companies turned cautious on hiring, according to the latest Purchasing Managers’ Index (PMI) data.
The HSBC India Services PMI Business Activity Index slipped to 58.0 in December from 59.8 in November, marking the slowest expansion in 11 months. While the reading remains firmly above the 50-mark that separates growth from contraction, it points to a gradual cooling in activity after a largely resilient year for services.
1 January 2026
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"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," said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
Firms cited competitive pricing and steady client interest as supportive factors, even as a growing number of alternative and lower-cost service providers weighed on fresh orders. The moderation in demand translated into a more measured pace of output growth towards the end of the year.
One of the clearer signs of caution was in employment. After more than two years of steady job creation since June 22, hiring stalled in December. 96% of the companies reported no change in staffing levels, pointing to adequate capacity and stable backlogs as reasons for holding off on fresh recruitment. In services, employment dipped marginally, though the decline was described as fractional.
Cost pressures, however, remained relatively benign. Input prices rose at a quicker pace than in November, driven by higher expenses for items such as building materials, chemicals, salaries and office maintenance. Even so, inflation levels were among the softest seen in over five years. Output charges also edged up only modestly, with fewer than 3% of firms reporting any increase in prices charged to customers.
"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 added.
External demand provided a partial cushion. Services exporters reported stronger gains from markets including Asia, North America, the Middle East and the UK. New export orders grew at a faster pace than in the previous month, standing out against the broader deceleration in domestic demand.
"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," Lima noted
Services in November
India's services sector growth accelerated during November, after losing some momentum in October, driven by a faster upturn in new business intakes and subdued price pressures. It rose to 59.8 in November, from 58.9 in October, supported by new business growth.
International sales continued to improve during the period, as firms reported gains from Asia, Europe and the Middle East. However, the rate of expansion retreated to an eight-month low due to fierce international competition and the supply of cheaper services elsewhere constrained growth.
