- Insights December HSBC India manufacturing PMI data revealed that, despite weaker increases in production, new orders, and purchase stocks, the sector improved the least in 2024.
- Nonetheless, growth rates were significant, supporting additional increases in employment and purchasing power.
- Although manufacturers were optimistic about an increase in output, their optimism was tempered by worries about inflation and pressure from competitors.
The industry improved the least last year, according to data from the December HSBC India Manufacturing Purchasing Managers’ Index (PMI) survey, despite lower growth in production, new orders, and buy stocks.
However, growth rates continued to be strong, supporting additional increases in employment and purchasing power.
Charge inflation remained historically high, but cost pressures subsided and were only moderate. The seasonally adjusted HSBC India manufacturing PMI, which was at a 12-month low in December at 56.4, showed a less robust improvement in operational conditions.
Although the headline number decreased from 56.5 in November, it was still higher than its long-term average of 54.1, indicating a strong growth rate. Businesses kept saying that promotion and a healthy clientele helped boost sales.
Although it was the joint-slowest expansion in a year (equal to September), the most recent expansion was nonetheless sharp. According to a report from S&P Global Ratings, qualitative data indicated that pricing pressures and competition were impeding development.
Likewise, manufacturing output increased at a significant rate, which was the slowest of the previous year. The primary factor influencing production growth was determined to be favourable demand.
The speed of growth for new export sales accelerated as businesses were able to acquire overseas orders from all around the world, even if new export sales increased more slowly than total new business. Indian manufacturers reported yet another increase in total expenses, with labour, material, and container prices apparently on the rise since November. By historical standards, the pace of input price inflation was mild, having slowed from the previous month.
In December, selling prices increased more than cost burdens, and the increase was bigger than average over the previous 20 years of the period. Pricing power was bolstered by demand resiliency.
Indian manufacturing firms bought more inputs for their production processes as a result of continuous advances in new work intakes. Even though the growth rate was the second-slowest in 2024 (higher only than in November), it was still above its trend.
December saw a tenth consecutive month of growth in manufacturing employment, and the rate of job creation accelerated to its strongest level in four months. Approximately 10% of businesses increased their workforce, and less than 2% of businesses reduced employment.
Indian businesses were optimistic about an increase in output in 2025. Advertising, investment, and the anticipation of good demand all contributed to optimism. However, worries about inflation and pressures from competition dampened the mood.