HSBC India Manufacturing PMI Drops to 12-Month Low in December

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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.

January 2025 : The HSBC India Manufacturing PMI® for December 2024 fell to a 12-month low of 56.4, down slightly from 56.5 in November. Softer increases in output, new orders and stocks of purchases contributed to the slowdown though advertising and strong client appetite supported sales.

At 56.4 in December, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (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.

Qualitative data suggested that growth was hampered by competition and price pressures.

Factory output rose at a substantial pace that was nevertheless the slowest in 2024. 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, and one that was stronger than seen on average in the near 20-year series history. Anecdotal evidence showed that 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% of firms shed jobs.

With regards to input inventories, purchasing growth and shorter lead times underpinned another monthly increase. The rate of accumulation was sharp, albeit the weakest since December 2023.

On the other hand, there was a renewed decline in postproduction inventories. Moreover, the rate of contraction was the quickest seen in seven months.

Capacity pressures among Indian manufacturers remained mild, as seen by another marginal increase in work either pending completion or not-yet-started.

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