Manufacturing PMI weakest in 12 months, drops to 56.4 in December

India’s manufacturing PMI (Purchasing Managers’ Index) fell to a 12-month low at 56.4 in December, thus recording the weakest growth in the calendar year. Falling marginally down from 56.5 in November, the seasonally adjusted HSBC India Manufacturing PMI showed ‘weaker improvement’ in operating conditions.

Despite new export sales growth rising at a slower rate than total new businesses, the firms were able to secure international orders, strengthening growth rate for export sales, it states.

The HSBC report noted that factory orders and production expanded at softer rates. Overall expenses have continued to rise, with rising costs since November for labour, materials and containers. “Having eased since the previous month, the rate of input price inflation was moderate by historical standards.”

Despite being the second-slowest in 2024, the rate of growth continued above its trend.

Improvements in new orders drove manufacturers in India to purchase additional inputs for their production processes. The rate of growth remained above its trend, despite being the second-slowest in 2024. The rate of employment surged to the fastest in four months. Around one in ten companies recruited extra staff, while less than 2% of firms reduced jobs.

“Selling prices rose to a greater extent than cost burdens, and one that was stronger than seen on average in the near Selling prices rose to a greater extent than cost burdens, and one that was stronger than seen on average in the near,” it adds.

It further states that a renewed decline was witnessed in post-production stock. The rate of contraction was the quickest in seven months. Stocks were depleted due to high sales volumes, according to the panel members.

“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,” says Ines Lam, economist at HSBC.