New Delhi, Jan 6 (PTI) India's services sector growth moderated in December, as the rates of expansion in incoming new work and output eased to the slowest in 11 months, and companies refrained from recruiting additional staff, a monthly survey said on Tuesday.

The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction. Firms remained upbeat towards growth prospects, but overall sentiment fell to its lowest level in nearly three-and-a-half years, the survey said.

"While India's service sector continued to perform well in December, the retreat in several survey indicators as 2025 ended may suggest a moderation in growth heading into the new year," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

In terms of external demand, monitored companies noted another improvement, with gains from Asia, North America, the Middle East and the UK. New export orders rose at a marked pace.

On the price front, there were benign increases in input costs and output charges, according to the survey.

"What bodes well for the outlook is the benign inflation environment. If services firms continue to see only mild increases in their expenses, they should be better positioned to compete and limit price hikes, thereby boosting sales and creating more jobs," Lima said.

Meanwhile, Indian services companies were confident of a rise in business activity in 2026, but the overall level of positive sentiment fell for the third straight month to its lowest in close to three-and-a-half years amid heightened market uncertainty and concerns around exchange rate movements.

"Companies did express some anxiety about market uncertainty and exchange rate movements. While recent rupee weakness may have driven import costs higher, it likely made exports more competitive. Notably, against the wider trend of slowing growth, services exports rose to a greater extent in December," Lima added.

Meanwhile, private sector output growth receded to an 11-month low in December.

The HSBC India Composite PMI Output Index fell from 59.7 in November to 57.8 in December, the weakest since January 2025, amid slowdowns at both manufacturers and service providers.

Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors, as per official GDP data.

India's private sector continued to record benign increases in both input costs and output charges. Job creation at the composite level stalled in December, amid a slowdown in growth among goods producers and fractional job shedding at service providers, the survey said.

Looking ahead, private sector companies remained optimistic towards growth prospects, though the level of sentiment slipped to a 41-month low, the survey added. PTI DRR DR DR

India services sector growth slowed in December as PMI readings eased, job creation stalled, but exports rose. India's services sector expansion eased in December with the HSBC India Services PMI falling from 59.8 to 58.0 and the Composite PMI Output Index declining to 57.8, reflecting slower new work and output, stalled private sector job creation, rising new export orders, and only benign increases in input costs and output charges amid heightened market uncertainty and exchange rate concerns.