India’s manufacturing activity ended 2024 on a weaker note, as the Purchasing Managers’ Index (PMI) for December fell to 56.4, marking its lowest level in the past 12 months. The December PMI dropped from 56.5 in November, signaling a softer improvement in operating conditions, although it remained above the long-term average of 54.1, indicating continued growth in the sector.
The data, released by S&P Global on Thursday, highlighted a slowdown in several key areas, including output, new orders, and inventory levels. Despite easing cost pressures and continued job growth, the manufacturing sector experienced the slowest expansion of the year.
According to the survey, firms reported that advertising and positive client demand supported sales growth. However, competition and price pressures were identified as challenges to further expansion. Ines Lam, Economist at HSBC, commented that India’s manufacturing sector ended 2024 with signs of moderate slowdown, noting that the rate of growth in new orders was the slowest of the year, suggesting potential weakness in future production. While export orders showed an increase, the growth rate for exports was slower than that for total new orders, although it rose at the fastest pace since July.
The report also indicated that input price inflation, though moderate by historical standards, continued to rise, with increases in container, material, and labor costs reported since November.
On the employment front, S&P Global noted that manufacturing employment rose for the tenth consecutive month in December, with job creation reaching its fastest pace in four months. Around 10% of companies added staff, while less than 2% reduced their workforce.
Regarding inventory, the survey showed a continued increase in purchasing activity and shorter lead times, though the rate of inventory accumulation was the slowest since December 2023. Post-production inventories declined at their fastest pace in seven months due to high sales volumes.
Looking ahead to 2025, manufacturers remain optimistic about output growth, driven by expectations of favorable demand, continued advertising, and investment. However, concerns about inflation and competitive pressures are tempering overall sentiment.
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