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Summary
India’s Purchasing Managers’ Index readings softened as 2025 drew to a close, but too slightly to pose a worry. The economy has done well. Next year’s hope is that it shows up in corporate earnings.
The purchasing managers’ index (PMI) for Indian services in December released on Tuesday mirrors the trend in manufacturing, with the year ending on a note of moderation. The reading dipped to an 11-month low of 58.0 from 59.8 in November. The PMI for manufacturing reported days earlier fell to 55.0 from 56.6 over the same period.
This should, however, be seen as a cool-off rather than a slump. At current levels, both PMI readings are well above the 50 mark, reflecting expansion in activity. Overall, 2025 has been a good year for India’s economy. High growth amid low inflation has made for a “Goldilocks” scenario despite export headwinds created by sharply hiked US tariffs.
Since the services sector contributes the bulk of India’s economic output, its performance has been encouraging. The factory sector having held up well suggests that demand did not slacken in the last month of 2025 after the festive upshoot following India’s GST rate cuts.
The momentum visible in PMI index readings, though, needs to translate into robust corporate earnings in 2026. These are taking rather long to perk up strongly enough to put stock prices back on an incline.
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