December HSBC India manufacturing purchasing managers’ index (PMI) survey data showed the sector improved to the least extent last year amid softer increases in output, new orders and stocks of purchases.
Rates of growth remained substantial, however, underpinning further expansions in buying levels and employment.
Meanwhile, cost pressures receded and were mild, but charge inflation remained historically high. At 56.4 in December, the seasonally adjusted HSBC India manufacturing  PMI was at a 12-month low and indicated a weaker improvement in operating conditions.
The headline figure was down from 56.5 in November, but remained above its long-run average of 54.1, thereby signalling a robust rate of growth. Firms continued to report that advertising and positive client appetite supported sales.
The latest expansion was sharp, though the joint-slowest in a year (equal to September). Qualitative data suggested that growth was hampered by competition and price pressures, S&P Global Ratings said in a release.
Similarly, factory output rose at a substantial pace that was the slowest last year. Favourable demand was identified as the main determinant of production growth.
Although new export sales rose at a slower rate than total new business, the pace of growth for the former strengthened as firms were able to secure international orders from across the globe.
With container, material and labour costs reportedly rising since November, Indian manufacturers registered another increase in overall expenses. Having eased since the previous month, the rate of input price inflation was moderate by historical standards.
Selling prices rose to a greater extent than cost burdens in December, and one that was stronger than seen on average in the near 20-year series history. Demand resilience supported pricing power.
Ongoing improvements in new work intakes prompted manufacturing companies in India to purchase additional inputs for use in production processes. The rate of growth remained above its trend, despite being the second-slowest in 2024 (faster only than in November).
Not only did manufacturing employment increase for the tenth month in a row during December, but also the rate of job creation quickened to the fastest in four months. Around one-in-ten companies recruited extra staff, while fewer than 2 per cent of firms shed jobs.
Looking to 2025, Indian manufacturers were confident of a rise in output. Optimism reflected advertising, investment and expectation of favourable demand. The sentiment was, however, curbed by concerns around inflation and competitive pressures.
Fibre2Fashion News Desk (DS)