Bengaluru, India – India’s private sector activity expanded at its slowest pace in six months in November, with a sharp slowdown in manufacturing growth offsetting gains in the services sector, according to the latest HSBC flash India Composite Purchasing Managers’ Index (PMI).

The composite PMI, compiled by S&P Global, declined to 59.9 in November from October’s 60.4, slightly below the Reuters median forecast of 60.1. While the reading remains above the 50-point threshold separating growth from contraction, the three-month decline signals that India’s economic momentum is moderating.

Manufacturing Hits Nine-Month Low

The flash India Manufacturing PMI fell to a nine-month low of 57.4 from 59.2 in October. Factory production growth weakened to its lowest level since May, driven by soft new business inflows.

Survey respondents cited heavy rains in certain regions and intense global competition as key factors affecting order volumes.

“Overall new orders came in soft, indicating that the GST-led boost may have peaked,” said Pranjul Bhandari, Chief India Economist at HSBC.

Services Sector Provides Cushion

India’s dominant services industry remained resilient, with the services PMI rising to 59.5 from 58.9 in October. The sector helped offset some of the weakness in manufacturing, keeping overall growth in positive territory.

Exports and Trade Pressures

New export orders grew at the slowest pace since March, highlighting the impact of 50% punitive U.S. tariffs on certain Indian imports. India’s merchandise trade deficit reached a record high last month, with U.S. exports down nearly 9% year-on-year.

To mitigate the impact, the Indian government recently announced over $5 billion in support, including credit guarantees and bank loans for exporters.

Jobs, Inflation, and Monetary Policy

Optimism about output over the next year slipped to its lowest level since July 2022, contributing to slower job creation.

Meanwhile, inflationary pressures eased: input costs rose at their weakest rate in over five years, and output charge inflation fell to an eight-month low. Consumer inflation dropped to a record low of 0.25%, increasing expectations that the Reserve Bank of India (RBI) will ease monetary policy, with a quarter-point repo rate cut widely anticipated next month.