India's manufacturing PMI softens to 18-month-low at 54.9 in Dec: Report

In December, the manufacturing sector in India sustained its growth, even though the HSBC Purchasing Managers' Index (PMI) reported an 18-month low at 54.9, a private survey showed.

According to the Manufacturing Purchasing Managers' Index, compiled by S&P Global, the December manufacturing PMI stands lower than the November figure of 56.0. Nevertheless, despite this decline, the measure of manufacturing sector activity in December remained above the critical threshold of 50, which signifies expansion and has been maintained for the 30th consecutive month.

Encouragingly, the report highlights softer yet sharp increases in factory orders and output, coupled with a strengthening business confidence towards the year-ahead outlook.

Furthermore, the input costs rose at the second-slowest rate in nearly three-and-a-half years, contributing to charge inflation at a nine-month low.

Manufacturing production saw another sharp increase in December, driven by new business gains, favorable market conditions, and participation in fairs and expositions. Despite a softening in the rate of expansion, the sector remained above its long-run average.

The uptick in international order receipts continued for the twenty-first consecutive month, with gains reported from clients in Asia, Europe, the Middle East, and North America.

Pranjul Bhandari, Chief India Economist at HSBC, commented on the positive outlook, stating, "India’s manufacturing sector continued to expand in December, although at a softer pace, following an uptick in the previous month. Rates of increase in input and output prices were broadly unchanged."

The survey also highlighted a general lack of pressure on the capacity of manufacturers, with stable employment levels and a marginal uptick in outstanding business volumes.

The year-ahead outlook for production indicates optimism among Indian manufacturers, with factors such as advertising, better customer relations, and new enquiries boosting business confidence in December.