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In a sobering first indicator about India’s economy in 2025, private sector activity appears to have hit the brakes in January with output and growth levels sliding to a 14-month low, as per the survey-based HSBC Flash Purchasing Managers’ Indices (PMI).

Even as cost pressures intensified for firms compelling them to raise prices at a faster rate, manufacturing activity actually strengthened, with new orders hitting a six-month high growth rate. However, this was more than offset by a sharp slowdown in the services economy.

“Indian private sector companies started 2025 with a slowdown in growth. With the rise in new business intakes receding, aggregate output increased at the weakest pace since November 2023,” said S&P Global which conducts the surveys of 400-odd firms each in manufacturing and services.

While PMI numbers for a month are released at the beginning of the subsequent month, the Flash PMI data are calculated from around 80-90% of total responses with an aim to provide an accurate early indication of the final data.

The HSBC Flash India Composite Output Index, a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors, plummeted from December’s reading of 59.2 to 57.9 in January. A reading of over 50 on the index signals an expansion in activity.

The HSBC Flash India Services PMI Business Activity Index stumbled to 56.8 from December’s 59.3 reading. While this cooling was largely driven by domestic demand trends, global sales grew at the fastest pace in six months for service providers as well as goods producers. The HSBC Flash India Manufacturing PMI increased from 56.4 to 58 in January, marking the best uptick for the sector since July 2024.

For Services players, new business grew at the slowest since November 2023, dragging optimism levels to a three-month low. On the other hand, confidence levels improved among manufacturing firms to a level not seen since May last year.

Cost pressures rose at a ten-month low pace for producers, but surged at an almost 18-month peak rate for service providers, with firms reporting higher expenses on chemical, labour, leather, meat, rubber and vegetables.

Perhaps the only parameter that Services firms did better was outstanding business volumes, which rose faster than experienced by goods manufacturers. S&P Global said capacity pressures in the private sector seem to be rising with outstanding business growing at the fastest rate in nearly two-and-a-half years.