MUMBAI: After the record shows in the previous few months, economic activity slowed down drastically hitting a 10-month low in December with the manufacturing showing its slowest pace in two years and services also inching down to the slowest pace since February, shows a private survey.
According to the HBC composite flash index, manufacturing and services sectors activity fell to 58.9 in December from 59.7 in November, growing at its slowest pace since February. While both the sectors witnessed muted growth in business activity, the fall was sharper in the manufacturing sector which logged its weakest improvement in the last two years, says the survey.
The HSBC flash composite output index measures the combined performance of the manufacturing and services sectors activity and is a seasonally adjusted index that tracks on-month changes in the combined output of these two sectors. A reading above 50 indicates economic expansion, while one below 50 shows contraction and a reading of 50 signifies no change.
The flash PMI ends 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," the survey said Tuesday. Though growth in new orders remained muted in December, 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, England, Germany, the Middle East, Sri Lanka, and the US. However, 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. Companies in both manufacturing and services said their current staff levels are enough to handle new orders. As a result, employment stayed almost unchanged. Manufacturing added a small number of workers, while services employment remained stable. Work backlogs also stayed steady for the third month in a row.
Despite very low inflation 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.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.