India’s manufacturing activity closed the year at a 12-month low with the Purchasing Managers’ Index (PMI) for the month of December dropping to 56.4, posting its weakest growth rate of 2024, data released by S&P Global on Thursday showed. This indicated a weaker improvement in operating conditions. The headline figure was down from 56.5 in November, but remained above its long-run average of 54.1 thereby signalling a robust rate of growth. The December data showed the lease growth in the sector in 2024, amid softer increases in output, new orders and stocks of purchases. This was despite easing cost pressures and strong jobs growth.
Per the survey, firms continued to report that advertising and positive client appetite supported sales. The latest expansion was sharp, though the joint-slowest in a year (equal to September). Qualitative data suggested that growth was hampered by competition and price pressures.
Ines Lam, Economist at HSBC, said, “India’s manufacturing activity ended a strong 2024 with a soft note amidst more signs of a slowing trend, albeit moderate, in the industrial sector. The rate of expansion in new orders was the slowest in the year, suggesting weaker growth in future production. That said, there was some uplift in the growth of new export orders, which rose at the fastest pace since July. The rise in input prices eased slightly, wrapping up the year when Indian manufacturers felt the strain of sharp cost pressures.”
The HSBC Final India Manufacturing PMI, compiled by S&P Global, stated that the factory output rose at the slowest pace in 2024 and a favourable demand was identified as the main determinant of production growth. Although, it added, new export sales rose at a slower rate than total new business, the pace of growth for the former strengthened as firms were able to secure international orders from across the globe.
Indian manufacturers registered another increase in overall expenses with container, material and labour costs reportedly rising since November.Having eased since the previous month, the rate of input price inflation was moderate by historical standards, the survey report added.
On the employment front, S&P Global said, the manufacturing employment increased for the tenth month in a row during December and the rate of job creation, it added, quickened to the fastest in four months. Around one-in-ten companies recruited extra staff, while fewer than 2 per cent of firms shed jobs, the survey maintained.
With regards to input inventories, purchasing growth and shorter lead times underpinned another monthly increase. The rate of accumulation was sharp, albeit the weakest since December 2023. On the other hand, there was a renewed decline in post production inventories. Moreover, the rate of contraction was the quickest seen in seven months. According to panel members, stocks had been depleted due to high sales volumes.
Looking to 2025, S&P Global said, Indian manufacturers were confident of a rise in output. Optimism reflected advertising, investment and expectation of favourable demand. Sentiment was nevertheless curbed by concerns around inflation and competitive pressures.