Manufacturing PMI slips to 56.4 in December; job creation surges

India’s manufacturing sector exhibited resilience in December 2024, with robust job creation and strong export demand. However, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) dipped slightly to 56.4 from November's 56.5, marking the year’s lowest reading.

Job creation sees a four-month high

Employment in the manufacturing sector grew for the tenth consecutive month, achieving the fastest pace of job creation in four months. About ten per cent of surveyed companies expanded their workforce, reflecting sustained optimism despite signs of a cooling industrial trend.

Export orders rise; domestic demand softens

While new orders saw their slowest expansion rate in 2024, export demand offered a silver lining. New export orders increased at the fastest pace since July, driven by stronger international demand. Domestic orders, however, showed signs of moderation due to price pressures and competition.

Stock depletion signals robust sales

Post-production inventories saw their sharpest decline in seven months, attributed to significant sales volumes. This highlights strong demand, although factory output and new orders grew at a slower pace compared to previous months.

Mild input cost inflation supports margins

Input cost inflation eased in December, with price pressures described as mild by historical standards. Firms capitalized on resilient demand to pass on costs, resulting in a sharp rise in selling prices. This pricing power, combined with favourable market conditions, helped manufacturers maintain margins despite higher container, material, and labour expenses.

Expert outlook remains optimistic

Ines Lam, Economist at HSBC, noted, “India’s manufacturing activity ended 2024 on a softer note, but growth remained robust. Slower expansion in new orders suggests potential moderation ahead, though export demand continues to shine.”

Despite a slight dip in PMI, the sector’s sustained resilience, buoyed by international demand and strategic cost management, positions India’s manufacturing landscape on a steady path for 2025.

(With inputs from agencies)