India’s manufacturing growth slows to 12-month low in December

By Staff Report January 3, 2025 2:19 pm IST

India’s manufacturing sector experienced its slowest growth in a year in December 2024, with slower expansions in output, new orders, and stock purchases. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropped to 56.4 from 56.5 in November, signaling a slowdown but remaining above the long-term average of 54.1.

India’s manufacturing sector recorded its slowest growth in a year in December 2024, as factory orders and production experienced softer increases. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped marginally to 56.4 from 56.5 in November, signalling a slowdown while remaining above the long-term average of 54.1.

The survey noted that the sector improved to the least extent in 2024, with slower expansions in output, new orders, and stock purchases. Despite this, manufacturing activity continued to grow at a robust pace. “December data showed the sector improving to the least extent in 2024, amid softer increases in output, new orders, and stocks of purchases,” the survey stated.

India’s broader economic data reflects this deceleration, with GDP growth in the September quarter slipping to 5.4% from 6.7% in the previous quarter. Manufacturing growth in the same quarter fell to 2.2% compared to 14.3% in the year-ago period, further underscoring the sector’s challenges.

Economist Ines Lam from HSBC remarked on the trend, stating, “India’s manufacturing activity ended a strong 2024 on a soft note amidst more signs of a slowing trend, albeit moderate, in the industrial sector. The rate of expansion in new orders was the slowest in the year, suggesting weaker growth in future production. However, there was an uplift in new export orders, which rose at the fastest pace since July.”

On a brighter note, the survey highlighted that job creation reached its fastest pace in four months, with around one in ten companies expanding their workforce. Cost pressures also eased slightly, although charge inflation remained elevated.

The PMI report, based on responses from 400 manufacturers, concluded that while growth was substantial, the pace reflected a moderation compared to earlier months. Factory output, though expanding, recorded its slowest increase of the year, attributed primarily to competitive pressures and rising costs.