India's Manufacturing sector holds strong in December despite PMI Dip

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India's Manufacturing sector holds strong in December despite PMI Dip

India's Manufacturing sector holds strong in December despite PMI Dip

Industry News
Jan 03,24

S&P Global, the compiler of the index, noted that December's PMI reading signifies a substantial improvement in the sector's health. Despite being above the long-term series trend, it contributed to the lowest quarterly average (55.5) since Q1 2022-23.

India's Manufacturing sector holds strong in December despite PMI Dip

India's manufacturing sector maintained its expansion in December, as per data released on January 3, despite the HSBC Purchasing Managers' Index (PMI) hitting an 18-month low of 54.9. Although this figure is below November's 56.0, it remains above the crucial 50 level that distinguishes activity expansion from contraction, marking the 30th consecutive month above this threshold.

The slower pace of new order growth in December, the weakest in a year and a half, impacted manufacturing output growth, reaching its lowest since October 2022 due to diminishing demand for certain products. However, international orders continued their upward trend for the 21st consecutive month, although new export sales grew at their slowest rate in eight months.

S&P Global observed a general lack of pressure on manufacturers' capacity in December, resulting in stable employment levels with a sub-index just marginally above 50.

Looking ahead, Indian manufacturers displayed optimism about the year-ahead production outlook in December, citing factors such as advertising, improved customer relations, and new inquiries as key contributors to boosted business confidence.

On the pricing front, there was positive news, with manufacturers' cost inflation in December at its second-weakest level in nearly three and a half years. Prices charged by manufacturers rose more than input costs for the fourth consecutive month, with survey participants attributing the fee hikes in December to passing on recently absorbed cost burdens to clients, according to the survey report.