India's Manufacturing Sector Expands in December, HSBC PMI at 18-Month Low of 54.9

3 Jan 2024 , 02:10 PM

India’s manufacturing sector sustained expansion in December, registering an HSBC Purchasing Managers’ Index (PMI) of 54.9, an 18-month low.

Despite the decline from November’s 56.0, the December PMI remained above the crucial 50 level, denoting the 30th consecutive month of activity expansion.

S&P Global, which compiles the index, views the December PMI as indicative of a notable improvement in the sector’s health, although it contributed to the lowest quarterly average (55.5) since Q1 2022-23.

New orders in December increased at the slowest pace in a year-and-a-half, leading to the lowest manufacturing output growth since October 2022 due to fading demand for specific products.

International orders continued to rise for the 21st consecutive month in December, albeit with new export sales growing at their slowest pace in eight months.

The data reflected a general lack of pressure on manufacturers’ capacity, resulting in stable employment levels and a sub-index just marginally above 50.

Increased capacity utilization is crucial for manufacturers to boost capital expenditure.

Manufacturers were optimistic about the year-ahead production outlook in December, citing advertising, improved customer relations, and new inquiries as factors boosting business confidence.

On the prices front, the rate of inflation of manufacturers’ costs in December was the second-weakest in nearly three-and-a-half years. Manufacturers’ prices rose more than input costs for the fourth consecutive month, with survey participants attributing the increase to the pass-through of absorbed cost burdens to clients.

For feedback and suggestions, write to us at [e-mail]