Updated – January 02, 2025 at 03:35 PM. | New Delhi, January 2
However, job creation rate surged to four-month high in December
Not only did manufacturing employment increase for the tenth month in a row during December, but the rate of job creation also quickened to the fastest in four months. | Photo Credit: K_Ananthan
With the end of festive demand, the manufacturing sector slowed down as the Purchasing Managers’ Index (PMI) dropped to a 12-month low at 56.4 in December, an S&P Global survey result showed on Thursday. However, the good news is that the job creation rate was the fastest in four months.
“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,” S&P Global said in a statement. The index is based on responses from purchasing executives of 400 companies in the manufacturing sector. Index above 50 means expansion, while a figure below 50 indicates contraction.
The survey statement said that not only did manufacturing employment increase for the tenth month in a row during December, but the rate of job creation also 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,” the statement said. It may be noted that manufacturing is considered the biggest job multiplier.
Further, it said that with the sole exception of finished goods stocks, all final index readings for the manufacturing PMI survey came in below their ‘flash’ estimates. December data showed the sector improving to the least extent in 2024, 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 PMI was at a 12-month low and indicated a weaker improvement in operating conditions, the statement said.
“India’s manufacturing activity ended a strong 2024 on a soft note amidst more signs of a slowing trend, albeit moderate. 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 a year when Indian manufacturers felt the strain of sharp cost pressures,” Ines Lam, Economist at HSBC, said.
Meanwhile, the statement noted a renewed decline is post-production inventories. Moreover, the rate of contraction was the quickest seen in seven months. According to panel members, stocks were depleted due to high sales volumes. Capacity pressures among Indian manufacturers remained mild, as seen by another marginal increase in work, either pending completion or not-yet-started.
“Looking to 2025, Indian manufacturers were confident of a rise in output. Optimism reflected advertising, investment and expectation of favourable demand. Sentiment was nevertheless curbed by concerns around inflation and competitive pressures,” the statement said.