India's Manufacturing Momentum Cools As PMI Slips To 55 In December
Growth in export orders lost momentum during the month, with international demand rising at the slowest rate in 14 months.
India’s manufacturing sector expanded in December, albeit at a slower pace, with the HSBC Manufacturing Purchasing Managers’ Index easing to 55.0 in December from 56.6 in November, a 38-month low, according to S&P Global.
Even with the decline, the index remained comfortably above the 50 threshold that separates expansion from contraction.
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted that despite the moderation, India’s manufacturing sector closed the year on firm ground. She said, “The sharp rise in new business intakes should keep companies busy as we head into the final fiscal quarter, and the lack of major inflationary pressures could continue to support demand.”
New business continued to register strong growth in December, although the rate was the slowest since December 2023. Factory production also increased, but at its weakest pace since October 2022. The softer increase in orders prompted firms to be more cautious in purchasing raw materials, even though total buying still rose.
Growth in export orders lost momentum during the month, with international demand rising at the slowest rate in 14 months. Among companies reporting growth, stronger demand from Asia, Europe and the Middle East was cited as the main factor.
De Lima highlighted the softer export trend, saying, “We have seen a steady spell of softer growth in new export orders. In fact, the share of companies signalling higher international sales in December was about half of the average for 2025.”
She also said that export growth was concentrated in fewer markets, mainly Asia, Europe and the Middle East. “With Indian manufacturers facing less intense cost pressures than elsewhere, many will be hoping that competitive pricing can help bring in new business from other regions in the new year,” she added.
With reduced pressure on production capacity, firms added only a limited number of workers in December. Employment growth was the weakest since the current expansion phase began in March 2024. Outstanding business rose slightly, indicating companies were broadly able to handle workloads with existing capacity.
Manufacturers remain optimistic about output growth in 2026, though confidence has fallen to its lowest point in nearly three-and-a-half years. While advertising, stable demand and new product launches are seen as supportive, some companies remain concerned about intense competition and market uncertainty.
