India's manufacturing activity grew at its weakest pace in 2024

New Delhi: Despite easing cost pressures and strong job growth, India's manufacturing activity grew at its weakest pace for the year 2024, falling to a 12-month low in December this year as new business orders and production expanded at softer rates. The December's Manufacturing Purchasing Managers’ Index or PMI marginally dropped to 56.4 from 56.5 in November. Nevertheless, the data, however, indicated that the rate of job creation quickened to the fastest in four months, the private survey showed on Thursday.

In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. Though the December PMI index showed a slight decline, the headline figure remained above its long-run average of 54.1, thereby signalling a robust rate of growth. “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. The rate of expansion in new orders was the slowest in the year, suggesting weaker growth in future production,” Ines Lam, Economist at HSBC, said.

S&P Global compiled the HSBC’s PMI survey in which the responses of 400 manufacturers’ questions were taken. As per the survey, the substantial rate of growth resulted in further expansions in buying levels and employment. “The ongoing improvements in new work intakes prompted manufacturing companies in India to purchase additional inputs for use in production processes and on the job front, around one in ten companies recruited extra staff, while fewer than 2 percent of firms shed jobs,” the survey noted.

Though the manufacturing sector growth was hampered by competition and price pressures, Lam, however, said that there was some uplift in the growth of new export orders, which rose at the fastest pace since July. “Although new export sales rose at a slower rate than total new business, the pace of growth for the former strengthened as firms were able to secure international orders from across the globe,” the survey noted.

On the price front, the survey further noted that with container, material and labour costs reportedly rising since November, Indian manufacturers registered another increase in overall expenses. On a month-on-month basis, however, the rate of input price inflation was moderate by historical standards. Looking to 2025, Indian manufacturers were confident of a rise in output. “Optimism reflected advertising, investment and expectation of favourable demand. Sentiment was nevertheless curbed by concerns around inflation and competitive pressures,” the survey said.