Manufacturing Takes the Biggest Hit
The decline was driven primarily by the manufacturing sector, where the Manufacturing PMI dropped to 57.4—its weakest reading in several months. This signals that new orders, production volumes, and hiring activity within factories all saw slower growth. As global demand weakens and domestic buyers show caution, manufacturers reported fewer fresh orders and reduced export opportunities.
Many firms also noted increased cost pressure and delays in supply chains, further affecting output. Businesses are adopting a more conservative approach to inventory and hiring amid concerns over uncertain global conditions.
Services Sector More Stable but Losing Export Strength
In contrast, the services sector showed mild resilience, continuing to expand at a steady pace. However, export orders in the services industry grew at the slowest rate in years. One major contributing factor is the higher U.S. tax regime, which has reduced the competitiveness of Indian service exports, especially in IT and business process outsourcing.
Inflation at Record Low, Opening Window for Rate Cuts
Despite the slower growth momentum, India received a major economic cushion—consumer inflation fell to a historic low of 0.25%, according to the survey data. This decline strengthens expectations that the Reserve Bank of India (RBI) may consider cutting interest rates to support growth, especially if demand continues to soften through December.
Business Confidence Weakens
The uncertainty around future domestic and global demand led to a drop in business confidence. Although companies still expect growth in the coming year, optimism has weakened compared to October as both local and international markets show signs of cooling.
Government’s Economic Support Measures
In response to rising macroeconomic concerns, the Indian government recently announced an economic stimulus package worth over $5 billion aimed at boosting investment, supporting small manufacturers, and improving supply-chain resilience. However, analysts believe the impact may take several months to reflect in economic indicators.
Conclusion
While India remains one of the fastest-growing major economies, the slowdown in November serves as a reminder that both domestic demand and global conditions continue to influence growth momentum. With inflation at record lows and manufacturing losing pace, all eyes are now on the RBI’s December policy meeting and the government’s next steps to stabilize the economy.