Faster Services Growth Lifts India’s Composite PMI, Even as Manufacturing Slips to 9-month Low

Moneylife Digital Team 03 December 2025

Economy & Nation

India’s services sector regained momentum in November, with business activity growth accelerating after a brief moderation in October, even as manufacturing output eased to a nine-month low. The seasonally adjusted HSBC India Services purchasing managers' index (PMI), compiled by S&P Global, rose to 59.8 from 58.9 in October, signalling what the report described as a 'historically sharp' expansion in activity.

Commenting on the findings, Pranjul Bhandari, chief economist for India at HSBC, says the November reading reflects 'robust new business intakes that fuelled output growth' in services, even as overseas competition constrained export gains. She noted that the composite PMI remained strong, despite a slowdown in factory production.

According to a release, the India services PMI rebound was powered by a faster rise in new business orders, which expanded at a pace above their long-run average. Survey participants cited firm domestic demand, improved client enquiries and supportive market conditions as key drivers. International sales also increased, though at a slower rate—the weakest in eight months—amid intense global competition and the availability of cheaper services in competing markets across Asia, Europe and the Middle East.

"Encouragingly for service providers, cost pressures continued to soften, with input price inflation falling to its lowest level since August 2020," the report says. "Companies reported only marginal increases in expenses such as electricity, food, rent and software subscriptions. With cost burdens receding, companies raised their own selling prices only slightly, resulting in negligible output charge inflation, the weakest in over four years."

Despite the pick-up in demand, employment growth in the service sector remained modest, broadly unchanged from the previous two months. Many companies indicated that stable workloads and adequate staffing levels limited the need for additional hiring. Outstanding business volumes were largely unchanged, reflecting an absence of pressure on operating capacities, the report added.

According to the report, business confidence dipped slightly during the month, with concerns linked to growing competition and potential disruptions from state assembly elections. "Nevertheless, most companies remain upbeat about output prospects for the year ahead, supported by favourable demand conditions, increased social media outreach, new marketing initiatives and an intention to limit price hikes."

Across the broader private sector, the HSBC India Composite PMI slipped from 60.4 in October to 59.7 in November, indicating continued strong expansion but at the slowest pace since May. The slowdown was attributed largely to weaker growth in factory output and softer increases in new manufacturing orders.

The report noted a broad-based reduction in input cost inflation across both manufacturing and services, with the current rise in aggregate expenses registering as the weakest in the 64-month inflation sequence. Softer cost pressures helped ease overall output price inflation to an eight-month low.

Meanwhile, India’s manufacturing sector lost some momentum, with the HSBC Manufacturing PMI dropping to 56.6 in November from 59.2 in October. The survey highlighted softer improvements in sales and production amid what firms described as challenging demand conditions.

The latest PMI readings suggest that while manufacturing has cooled, services continue to act as the key pillar of India’s economic momentum, supported by strong domestic demand and an easing inflation backdrop.

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