New Delhi, Jan. 6 -- Business activity in India's manufacturing and services industries softened as companies grappled with subdued demand, increased competition and inflationary pressures.

The seasonally adjusted HSBC India Services Purchasing Managers' Index (PMI) Business Activity Index hit an 11-month low of 58 in December, falling from 59.8 in November. With slower new work orders and easing output, companies refrained from recruiting additional staff.

Plus, operating expenses rose, with cost pressures reportedly stemming from building items, chemicals, medical supplies, salaries, vegetables and office maintenance fees.

"Anecdotal evidence suggested that growth was constrained by a greater presence of alternative providers and che...