India’s Manufacturing PMI fell to 55.0 in December from 56.6 in November. While a PMI reading above 50 indicates expansion, the December data marks the weakest improvement in factory activity in two years.
The monthly report released by S&P Global noted that India’s manufacturing sector ended 2025 on a softer note, with growth losing momentum in December. “The end of the 2025 calendar year was characterised by a loss of growth momentum across several measures tracked by the HSBC India Manufacturing PMI survey.” the report noted.
New orders and output grow at slower pace
According to the report, manufacturers continued to see an increase in new orders and output during the December, but the pace of growth slowed.
New business expanded at its weakest rate since December 2023, while output growth eased to its slowest pace since October 2022, reflecting competitive pressures and softer demand for certain products.
Despite the moderation, domestic demand remained supportive of overall manufacturing activity.
Export demand loses steam
Export orders rose for the month but at the slowest pace in 14 months, indicating a continued slowdown in overseas demand.
Companies reported that most export growth came from Asia, Europe and the Middle East, while the overall share of firms seeing higher international sales declined sharply.
Firms cut back on hiring and input purchases
With growth cooling, manufacturers scaled back hiring and purchasing activity.
Employment rose only marginally in December, recording the slowest pace of job creation in the current 22-month expansion phase. Input buying also increased at its weakest rate in two years, as firms remained cautious about demand conditions.
Inflation pressures remain muted
Cost pressures stayed low in December, offering some relief to manufacturers.
Input costs rose at a historically negligible pace, among the lowest seen in 2025, despite higher prices for items such as bamboo, chemicals, glass, leather and packaging.
At the same time, output price inflation eased to a nine-month low, indicating limited pressure on consumer prices.
Business confidence weakens despite growth outlook
The report noted that while manufacturers expect output to rise in 2026, overall business sentiment weakened. Confidence slipped to its lowest level in nearly three-and-a-half years, with companies citing competitive pressures and market uncertainty as key concerns.
Commenting on the data, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said:
“Even with growth momentum easing, India’s manufacturing industry wrapped up 2025 in good shape. The sharp rise in new business intakes should keep companies busy as we head into the final fiscal quarter, and the lack of major inflationary pressures could continue to support demand.”
She added that export growth remains a concern, noting that the range of export destinations has narrowed in recent months.