India's flash PMI falls to 58.9 in Dec, growth at softest pace since Feb

Flash PMI December 2025: Both manufacturing and service sectors witnessed muted growth in business activity

The HSBC Flash India Composite Output Index, which measures the combined performance of India’s manufacturing and services sectors, fell to 58.9 in December from 59.7 in November, growing at its slowest pace since February, according to data released by S&P Global on Tuesday.

 

This seasonally adjusted index, which tracks month-on-month changes in the combined output of the two sectors, indicated a slower rate of expansion. Both manufacturing and service sectors witnessed muted growth in business activity, the report said.

 

However, the overall growth remained strong, with the index staying well above the neutral mark. A reading above 50 indicates economic expansion, while one below 50 shows contraction in the manufacturing, services, or construction sectors. A reading of exactly 50 signifies no change.

 

 

Andrew Harker, economics director at S&P Global Market Intelligence, said, "The HSBC Flash India PMI ended 2025 in positive fashion, completing a year of marked growth for the private sector. Rates of expansion in output and new orders eased in December, but remained sharp nonetheless. Firms were helped by inflationary pressures remaining muted as the year drew to a close."

New orders ease, exports at 3-month high

Growth in new orders remained muted in December, but it continued to rise sharply amid reports of improving customer demand.

 

However, the rate of growth in new export orders accelerated in December and was at a three-month high. Exporters enjoyed a strong demand from Australia, Bangladesh, Canada, Germany, the Middle East, Sri Lanka, the UK and the US.

 

The manufacturing sector logged its weakest improvement in the last two years as growth in output and new orders slowed in December. The index fell to 55.7 from 56.6 in November.

No increase in job creation

Companies in both manufacturing and services said their current staff levels were enough to handle new orders. As a result, employment stayed almost unchanged in December. Manufacturing added a small number of workers, while services employment remained stable. Work backlogs also stayed steady for the third month in a row.

 

Input costs rose, increasing slightly from November, which had seen the lowest rise in nearly five-and-a-half years. Output prices also rose slowly, marking the second-slowest increase in nine months. Overall price inflation in December was weaker than the average seen in 2025.

Forward outlook

While companies remain confident that business will grow, their optimism is slowly weakening. According to the report, confidence fell for the third straight month in December and is now at its lowest level since July 2022. The fall in confidence mainly came from the services sector, while manufacturing companies felt slightly more positive.

 

Businesses expect a steady flow of new orders to support growth next year, helped by good quality products and strong marketing. However, slower growth towards the end of the year has made companies more cautious.