India Manufacturing PMI Growth In December Eases To Slowest In 2024

India's manufacturing activity expanded at a slower pace in the final month of 2024 to come in below expectations, even as cost pressures receded during the month.

Falling to 56.4 in December, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index was at a 12-month low, indicating a weaker improvement in operating conditions.

All the final index readings of the PMI survey in below their 'flash' estimates except with the sole exception of finished goods stocks, as per a press release on Thursday. Factory activity rose to the least extent in 2024, amid softer increases in output, new orders and stocks of purchases, it said.

A "robust rate of growth" is still on cards given that the headline growth remained above its long-run average of 54.1. Meanwhile, cost pressures receded and were mild, but charge inflation remained historically high.

The manufacturing activity grew at a slower pace in November even as selling prices rose to the greatest extent since October 2013.

Analysts and top government officials continue to vouch for renewed economic growth in the third quarter. India's growth momentum is "up and away', Morgan Stanley said earlier as they expect "robust growth signals" in the months ahead.

“India’s manufacturing activity ended a strong 2024 with a soft note amidst more signs of a slowing trend, albeit moderate, in the industrial sector," according to Ines Lam, economist at HSBC. The rise in input prices eased slightly, wrapping up the year when Indian manufacturers felt the strain of sharp cost pressures, he said in the note.

Firms continued to report that advertising and positive client appetite supported sales. While factory output rose at the slowest pace in 2024, favourable demand was identified as the main determinant, the report said.

Further, the rate of job creation quickened to the fastest in four months, during December. "Around one in ten companies recruited extra staff, while fewer than 2% of firms shed jobs."

Looking to 2025, Indian manufacturers were confident of a rise in output, the report said, as optimism reflected advertising, investment and expectation of favourable demand. "Sentiment was nevertheless curbed by concerns around inflation and competitive pressures."