India's private sector growth hits 4-month high in December

Indian private sector output growth reached a four-month high this December, as the HSBC India combined Purchasing Managers’ Index (PMI) signalled stronger growth in the manufacturing and services sector.

The manufacturing and services sector recorded a combined PMI of 60.7 at the end of 2024, rising from 58.6 in November. This was driven by faster output growth across both goods producers and service providers.

The services sector witnessed a notable increase in demand, with its PMI climbing to a four-month high of 60.8 in December, up from 58.4 in November. The manufacturing sector showed signs of recovery in December 2024, as the PMI rose to 57.4, signalling improved business conditions. This followed a dip in November, when the PMI stood at 56.5, down from 57.5 in October, marking a joint 11-month low and reflecting a temporary slowdown in manufacturing activity.

“Aggregate job creation climbed to a survey peak amid a faster increase in outstanding business volumes and optimistic expectations for output in 2025,” it states.

Demand for Indian goods and services strengthened in December, driven by a sharp rise in new orders, marking the highest increase since July. 

Rising international demand for Indian goods and services continued to drive overall sales, reflected in a steady increase in new export orders. Notably, it was reported that December witnessed the fastest expansion in five months, with manufacturing firms reporting a stronger growth in export orders compared to service providers.

“December 'flash' data showed that cost pressures across India's private sector receded from September's 15-month high, broadly converging to its long-run average. Where an increase in expenses was reported, companies suggested that food, freight, labour, leather and rubber costs rose,” it adds.

Improving international demand for Indian goods and services continued to boost total sales, as seen by a sustained upturn in new export orders. Moreover, December's expansion was marked and the quickest in five months. On this front, manufacturing companies recorded a faster increase than their services counterparts.

“In this flash release, the small rise in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders and employment. The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum in the economy. In addition, sustained increases in input costs have pushed manufacturers to continue to raise selling prices. The output price index rose to its highest level since February 2013,” said Ines Lam, economist at HSBC.