S&P Global Data Reveals Slowdown in India’s Manufacturing Growth with an 18-Month Low PMI of 54.9

New Delhi, 03-01-2024 : In December 2023, India’s manufacturing sector witnessed a slowdown in its growth, as indicated by the HSBC India Manufacturing Purchasing Managers’ Index (PMI), which reached an 18-month low of 54.9, down from 56.0 in the previous month, according to data released by S&P Global. While the PMI figure above 50 signifies expansion, the deceleration reflects a dip in the pace of manufacturing activities. Despite the lower reading, it remained above the long-term series trend but contributed to the lowest quarterly average (55.5) since Q1 fiscal year 2022–23.

The S&P Global survey highlighted softer, yet more pronounced, increases in factory orders and output for December. However, business confidence in the year-ahead outlook strengthened during this period. Notably, input costs rose at the second-slowest rate in nearly three and a half years, and charge inflation softened to a nine-month low, offering some positive indicators for the manufacturing sector.

The HSBC India Manufacturing PMI, compiled by S&P Global from responses to questionnaires sent to purchasing managers, involves around 400 manufacturers. The panel is stratified based on detailed sector and company workforce size, contributing to GDP.

The survey reported that factors such as new business gains, favorable market conditions, fairs, and expositions collectively contributed to another sharp increase in manufacturing production in December. However, the rate of expansion was the weakest since October 2022, albeit remaining above its long-run average. The growth was reportedly hindered by fading demand for certain types of products.

International order receipts at goods producers in India marked the twenty-first consecutive increase in December, with companies noting gains from clients in Asia, Europe, the Middle East, and North America. New export sales expanded at a moderate pace, the joint-slowest in eight months.

Commenting on the findings, Pranjul Bhandari, Chief India Economist at HSBC, stated that India’s manufacturing sector continued to expand in December, albeit at a softer pace compared to the previous month. The growth of both output and new orders softened, but the future output index has been rising since November. Rates of increase in input and output prices were broadly unchanged.

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