Private sector in India eased to a 14-month low of 57.9 in January from a four-month high of 59.2 in December, preliminary results of a private sector survey said on Friday.
The HSBC India Composite PMI Flash reading, dipped below the 58 mark for the first time in 13 months.
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Latest data raises concerns about the sustainability of a strong economic performance with government estimates pointing to slower overall growth of 6.4% this fiscal year.
“Indian private sector companies started 2025 with a slowdown in growth. With the rise in new business intakes receding, aggregate output increased at the weakest pace since November 2023,” said HSBC in a press release.
The survey showed that the overall activity dipped during the month, manufacturing performance was better as factory output rose to a six month high of 58 from 56.4 in the previous month
Manufacturing was one of the laggards in the second quarter, pulling down growth to a seven-quarter low of 5.4%.
However, the index has been above the 50-mark separating expansion from contraction for three-and-a-half years, the longest continuous growth streak since mid-2013.
“India’s manufacturing sector started the year strong, with output and new orders bouncing back from a relatively weak third fiscal quarter. The rise in new export orders was especially noticeable and the easing of input cost inflation is also good news for manufacturers,” said Pranjul Bhandari, chief India economist, HSBC.
“The cooling in growth in new domestic business in the services sector, however, highlights a potentially emerging weak spot in the economy. New export business for service providers, on the other hand, looks set to maintain its growing momentum,” said Bhandari.
Notably, the uptick in manufacturing activity also provided a boost to business confidence, with sentiment at the highest since May 2024. Services sentiment, on the other hand, declined to a three month low.
Employment in manufacturing also received a fillip, helped by brighter outlook and lower cost escalation.
