India’s private sector activity slowed in January 2025, with the HSBC India Composite PMI Flash reading falling to 57.9, the weakest level since November 2023. This marks a dip from December’s four-month high of 59.2 and the first drop below 58 in over a year, according to a survey released on January 24.
Highlights of the survey:
- Private sector slowdown: Growth in aggregate output slowed due to a decline in new business intakes.
- Manufacturing rebound: Factory output climbed to a six-month high of 58, up from December’s 56.4, driven by strong domestic and export demand.
- Services sector underwhelms: New business growth in the services sector eased, indicating a potential weak spot in the economy.
Pranjul Bhandari, chief India economist at HSBC, noted, “India’s manufacturing sector started the year strong, with output and new orders bouncing back. The rise in new export orders and easing input costs are encouraging signs for manufacturers.”
However, Bhandari expressed caution regarding the services sector, where domestic business growth cooled, although export orders remained strong.
Economic Outlook
The government recently pegged FY25 economic growth at 6.4%, slightly below earlier estimates of 6.5%-7% and the Reserve Bank of India’s revised forecast of 6.6%.
Despite the private sector slowdown, manufacturing’s strong start to the year has boosted overall business confidence, with sentiment at its highest since May 2024. However, services sentiment declined to a three-month low.
This mixed performance underscores the need for policies that sustain growth momentum across sectors in the coming months.
