India’s manufacturing sector demonstrated continued resilience in December 2024, with employment increasing for the tenth consecutive month and reaching its fastest pace of job creation in four months, according to HSBC’s India Manufacturing Purchasing Managers’ Index (PMI). About 10 percent of companies reported workforce expansions, reflecting ongoing optimism in the sector. Meanwhile, post-production inventories saw their sharpest decline in seven months, driven by strong sales volumes that significantly reduced stock levels.
However, India’s manufacturing sector ended 2024 on a slightly weaker note, as the PMI for December dropped to 56.4, marking the lowest reading of the year. The figure, down marginally from November’s 56.5 and below the ‘flash’ estimate of 57.4, still signaled robust growth as it remained above the long-term average of 54.1. However, the data indicated a slowdown in key areas, including production, new orders, and inventories.
Ines Lam, Economist at HSBC, commented, “India’s manufacturing activity wrapped up 2024 on a softer note, with more signs of a moderate slowdown in the industrial sector. The rate of expansion in new orders was the slowest of the year, suggesting weaker growth in future production.”
Lam added, “On the positive side, new export orders grew at their fastest pace since July, and the rise in input prices eased somewhat, bringing some relief after manufacturers faced significant cost pressures throughout the year.”
Factory output and new orders grew at slower rates in December, reflecting increased competition and price pressures. While growth remained substantial, the month marked the joint-slowest pace of expansion for 2024. Despite this, firms reported that marketing efforts and positive client sentiment continued to support sales. Export orders provided a silver lining, with international demand increasing at its fastest pace since July, helping to offset weaker domestic order growth.
Input cost pressures moderated in December, with inflation easing to a level considered mild by historical standards. However, selling prices rose sharply as companies leveraged resilient demand to pass on higher costs. This pricing power, supported by favourable market conditions, allowed firms to maintain margins despite rising container, material, and labour expenses.
