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Informist, Thursday, Jan. 2, 2025

 

--India Dec manufacturing PMI 56.4 vs 56.5 in Nov 

 

NEW DELHI – India's manufacturing sector activity ended 2024 on a sombre note, with the HSBC India Manufacturing Purchasing Managers' Index falling to a 12-month low of 56.4 in December from 56.5 in November, S&P Global said Thursday. Cost pressures, on the other hand, receded even as charge inflation remained historically high, S&P Global said.

 

The final print for December is below the provisional estimate, with the flash PMI released on Dec. 16 having pegged last month's manufacturing index at 57.4. A PMI reading of more than 50 denotes expansion in activity from the previous month, while a print below 50 shows contraction.

 

"India's manufacturing activity ended a strong 2024 with a soft note amidst more signs of a slowing trend, albeit moderate, in the industrial sector," Ines Lam, economist at HSBC, said in a release. "The rate of expansion in new orders was the slowest in the year, suggesting weaker growth in future production." 

 

Sales of manufacturing firms remained supported by advertising and positive client appetite in December, but growth was hampered by competition and price pressures, S&P Global said. Similarly, factory output was the slowest in 2024 but still substantial, supported by favourable demand, it added. 

 

Firms saw another increase in overall expenses in December, led by container, material, and labour costs, S&P Global said. 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 input costs. The rise in selling prices was stronger than the average rise in the last 20 years. "Anecdotal evidence showed that demand resilience supported pricing power," S&P Global said. 

 

Employment generation increased for the tenth month in a row in December, and the rate of job creation was the fastest in four months. "Around one-in-ten companies recruited extra staff, while fewer than 2% of firms shed jobs," S&P Global said. 

 

"Looking to 2025, Indian manufacturers were confident of a rise in output," S&P Global said. "Optimism reflected advertising, investment and expectation of favourable demand. Sentiment was nevertheless curbed by concerns around inflation and competitive pressures."

 

The slowdown in the pace of expansion in manufacturing sector activity in December could be of concern to the Reserve Bank of India's Monetary Policy Committee, which will meet in February to decide on interest rates with new RBI Governor Sanjay Malhotra at the helm. The committee last month left the repo rate unchanged at 6.50% for the 11th consecutive meeting as inflation remained high even as growth was moderating. 

 

The RBI expects India's GDP to grow 6.6% in FY25, while the finance ministry projects the growth at 6.5%. The statistics ministry will release the first advance estimate of FY25 GDP on Tuesday.  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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