In December 2018, India’s private-sector activity was still expanding, however new survey data suggests that momentum has cooled as external trade pressures persist.
Flash survey results from HSBC revealed softer numbers in manufacturing and service sectors, despite the fact that demand conditions remained resilient.
These data come at a moment when long-running trade talks with the US are yet to bring relief from President Donald Trump’s steep tariffs, which have primarily affected labour intensive sectors.
The moderated headline indicators show that global trade uncertainty has begun to affect business sentiment.
The PMI indexes are down in December
HSBC’s Flash Purchasing Managers’ Index data revealed a decrease in all major indicators during December compared to November.
Manufacturing PMI fell to 55.7, down from 56.6 one month ago. This indicates a slower but solid growth in factory activity.
The PMI for the services sector also fell to 59.1 compared with 59.8.
The composite index which measures the performance of the private sector as a whole dropped from 59.7 to 58.9 in November.
As early indicators of the economic climate, PMIs are carefully monitored. A reading above 50 indicates expansion while one below it signals contraction.
All three indexes remain comfortably above 50, indicating that growth continues across the economy.
What PMI measures
PMI is a composite of preliminary surveys which assesses business conditions, such as new orders, output, employee numbers, and cost inputs.
When the PMI final data for December is released in January, it’s possible that some of these readings will be changed.
The purpose of these surveys is to measure business confidence, and identify trends in the near future. They do not provide an accurate picture of overall economic performance.
HSBC stated that the private sector in India continued to grow sharply towards the end of the year 2025. However, the growth rate slowed for both the manufacturing and service sectors.
The slowdown is due to a softening of demand, not a reverse in the underlying expansion.
The trade pressures are still in the spotlight
Trade talks between India and US are continuing without any clear deadline to reach an agreement which could reduce Washington’s tariffs of 50%.
Tariffs are a major burden for industries that rely on labour intensively, as they’re more vulnerable to changes in demand from abroad and the price competition.
Some trade indicators are improving despite the uncertainty. India’s November trade deficit decreased as its exports rebounded from the slump of October.
The number of shipments to the US has also increased unexpectedly in the last month. This suggests that some exporters are navigating the tariff environment better than expected.
Mixed signals from export orders
In the PMI, there was a slowdown in new order growth overall during December. This indicates a calming of domestic demand.
Export-oriented companies saw a completely different pattern.
The growth in export orders increased during the month, reaching a high of three months. This indicates a firmer demand overseas despite tariffs.
The divergence between the two suggests that, while the broader economy may have slowed down, pockets of external demand remain strong, possibly cushioning any negative impact prolonged trade talks on India’s Private Sector.
The post India PMI data indicates slower growth as US tariffs persist may be updated as new developments unfold
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