India's Manufacturing Activity
In December, India's manufacturing activity experienced its slowest growth rate in 12 months due to increased competition and price pressures, as highlighted by an HSBC Purchasing Managers’ Index (PMI) survey conducted by S&P Global.
Key Highlights
- The PMI eased to 56.4 in December from 56.5 in November, indicating a slight dip in manufacturing activity.
- Despite the December slowdown, the average PMI for 2024 improved to 57.5 compared to 56.8 in 2023, suggesting a stronger annual performance.
- The rate of expansion in new orders hit its lowest for the year, hinting at potential weaker growth in future production.
- A PMI reading above 50 signifies expansion in the sector.
Factors Influencing Growth
- Advertising and positive client appetite played a crucial role in supporting sales.
- Favorable demand was the primary driver for production growth.
Challenges Faced
- Price pressures intensified, with a significant rise in container, material, and labor costs since November.
- The increase in selling prices was one of the highest in approximately 20 years.
Employment and Output Outlook
- Manufacturing employment grew for the tenth consecutive month, with hiring reaching a four-month high in December.
- Approximately 10% of companies increased their workforce, while less than 2% reduced jobs.
- The outlook for 2025 remains positive, with manufacturers expecting a rise in output despite ongoing concerns about inflation and competitive pressures.