The latest HSBC India Services Purchasing Managers’ Index (PMI) showed that growth in the country’s services sector cooled in December, with the index slipping to 58.0, the slowest pace of expansion in 11 months. Although the reading remains comfortably above the neutral 50 mark, the moderation signals a gradual easing in momentum compared with previous months.

Key Highlights

• HSBC India Services PMI fell to 58 in December, marking the slowest expansion in eleven months.
• Despite moderation, services activity stayed firmly in expansion territory, reflecting resilient domestic demand.

The services sector, which accounts for a significant portion of India’s economic activity, continued to expand in December, supported by sustained client demand and new business inflows. However, survey participants reported that the pace of output growth softened, driven in part by elevated cost pressures and market uncertainties.

According to the PMI data, job creation in the services industry remained positive, though firms noted a slower increase in employment compared with earlier in the year. Input price inflation persisted, reflecting higher fuel and other operational costs, which weighed on business optimism to some extent.

The slower expansion in services activity comes amid broader macroeconomic dynamics, including cautious spending by some corporate clients and tightening cost management strategies. Despite this, firms generally remained upbeat about future prospects, with many expecting stable demand conditions in the first quarter of the new year.

Also Read: Manufacturing PMI Falls to 56.6 in November as Demand Weakens

Analysts view the December reading as a sign that while India’s services sector continues to grow, the rate of acceleration is moderating after periods of strong performance. They suggest that policymakers and businesses will be closely watching upcoming PMI releases for clearer signals on the trajectory of domestic demand and economic activity in 2026.