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India Services Growth Slows to 11-Month Low
6 Jan
Summary
- Services sector growth in India decelerated to an 11-month low in December.
- New business expansion and job creation in the services sector stalled.
- Despite slowdown, services exports showed a notable increase.
India's services sector witnessed a significant slowdown in December, with its Purchasing Managers' Index (PMI) activity falling to an 11-month low of 58.0. This marks a decrease from November's 59.8, indicating the slowest pace of expansion since January 2025. Companies reported a deceleration in new business and output growth, consequently leading to a halt in job creation within the sector.
Despite the overall moderation, there was a bright spot in services exports, which rose more significantly in December, potentially benefiting from recent rupee weakness. While business optimism declined for the third consecutive month, companies expressed some concerns regarding market uncertainty and currency fluctuations. Experts noted that the ongoing benign inflation environment bodes well for the sector's future prospects.
The services sector is a crucial component of India's economy, contributing over 50% to its GDP. While the overall economic expansion was robust in the July-September period, the recent slowdown in services growth, alongside a dip in the composite PMI to 57.8, suggests a need for careful monitoring as the nation enters the new year.
