India's Private Sector Sees Slowdown in 2025 Amid Decelerating Business Intakes

New Delhi, January [27/01/2025] - India's private sector companies started 2025 with a notable slowdown in growth as new business intakes decelerated, according to the latest HSBC 'flash' PMI data compiled by S&P Global.

The manufacturing sector showed resilience, with the manufacturing output index rising from 56.4 in December to 58 in January, its best performance since July 2024. Factory orders increased at their fastest pace in six months, while new business growth in the service sector slowed to its weakest rate since November 2023.

However, this weak growth was largely attributed to the slowing down of the service economy, leading to a decrease in overall industry output. The HSBC Flash India Composite Output Index fell from December's 59.2 to 57.9 in January, marking the slowest rate of expansion in 14 months.

The service sector reported reduced employment rates, with companies hiring temporary workers to meet the growing demands. On the other hand, export growth proved a silver lining, with both manufacturers and service providers reporting stronger international sales.

According to the report, capacity pressures intensified as outstanding business volumes rose at their quickest rate in nearly two and a half years. The manufacturing sector experienced easier input inflation, while the service sector faced its steepest cost increases in nearly 18 months.

Business confidence increased in the manufacturing sector, reaching its highest level since May 2024, but optimism among service providers dipped to a three-month low due to concerns over competition.

"The data reveals that India's private sector companies are facing challenges with new business intakes slowing down," said an HSBC spokesperson. "However, export growth and improved capacity in manufacturing offer some hope for the economic growth prospects of 2025."

The report also highlighted reduced finished goods stocks at their sharpest rate in nearly three years, while input purchases rose sharply to support pre-production inventories as suppliers' delivery times improved.

Overall, the slow-down in new business intakes poses a significant challenge for India's private sector companies, but with improvements expected in export growth and manufacturing capacity, there is some optimism for economic revival in 2025.