Economic Survey 2025: Manufacturing Growth Remains Below Pre-Pandemic Trajectory

The manufacturing sector, while steadily recovering, remains slightly below its pre-pandemic trajectory as it recovers from slowing global demand and supply chain disruptions, according to the Economic Survey 2024-25.

"In 2024, the global manufacturing PMI started strong, moving into expansion for the first time since mid-2023 and remained so through the first half of the year. By July 2024, weaker conditions pushed the PMI back into contraction," the survey stated.

PMI stands for Purchasing Managers' Index. It is a key economic indicator that provides insights into the health of the manufacturing and service sectors.

The survey states that manufacturing exports slowed significantly due to weak demand from destination countries, and aggressive trade and industrial policies in major trading nations.

In addition, it notes that variation in the timing of festivities between September and October in the previous and current years led to a modest growth slowdown in Q2 FY25.

Disaggregated data reveals that while many manufacturing sub-sectors experienced growth, others faced challenges, likely due to global and seasonal factors. "Oil companies suffered due to inventory losses and lower refining margins, while steel companies faced price pressures and lower global prices. The cement sector faced weak demand in Q2 due to heavy rains and lower selling prices," the survey says.

However, the survey notes that though the manufacturing sector growth has moderated, it shows positive expectations.

The survey points out that India continues to register the fastest growth in manufacturing PMI, adding that the expansion rate for December 2024 exceeded its long-term average, driven by new business gains, robust demand, and advertising efforts.

Companies have also reported that international orders grew to a four-month high, midway through the third quarter, signalling recovering external demand.