In December, India’s manufacturing sector experienced an 18-month low in growth due to a subdued increase in both factory orders and output, as reported by the HSBC India Manufacturing PMI survey conducted by S&P Global. Despite minimal inflation, the Purchasing Managers’ Index (PMI) dropped from 56 in November to 54.9 in December, indicating a decline in growth. According to Pranjul Bhandari, HSBC’s Chief India Economist, “India’s manufacturing sector continued to expand in December, although at a softer pace.”
However, the sector still showed robust expansion, driven by increased production triggered by new business gains, favorable market conditions, and participation in events. International order receipts saw their 21st consecutive increase in December, with companies benefiting from clients across Asia, Europe, the Middle East, and North America. Despite this, new export sales expanded moderately, marking the joint-slowest growth in eight months.
Regarding prices, input costs rose at a relatively slower rate, particularly in chemicals, paper, and textiles. Charge inflation also softened to a nine-month low, showing minimal change from November. Bhandari noted, “Rates of increase in input and output prices were broadly unchanged.”
The employment scenario remained relatively stable, indicating no significant pressure on the capacity of manufacturers by the end of the third fiscal quarter. Looking ahead, Indian manufacturers expressed heightened optimism for production in the coming year, citing factors like improved advertising, better customer relations, and increased new enquiries as reasons for increased business confidence in December.
