India's Dec factory activity growth hits 2024 low, PMI shows

India's manufacturing activity moderated to its slowest pace of growth in 12 months in December as increased competition and price pressures weighed on activity, a private survey released on Thursday showed. The HSBC Purchasing Managers' Index (PMI), compiled by S&P Global, eased to 56.4 last month from 56.5 in November.

Despite the December dip, the average PMI for 2024 rose to 57.5 from the 56.8 average recorded in 2023, signalling stronger annual performance.

"India's manufacturing activity ended a strong 2024 on a softer note, with more signs of a slowing trend, albeit moderate, in the industrial sector," said Ines Lam, economist at HSBC.


Adding to caution, she pointed out that the rate of expansion in new orders hit its lowest point of the year last month, suggesting likely weaker growth in future production.

The PMI stood at 54.9 in December 2023. A reading above 50 indicates expansion. The survey noted that advertising and positive client appetite supported sales last month. "Favourable demand was identified as the main determinant of production growth," it added.

While new export sales grew at a slower rate than overall new business, the pace of growth for export sales strengthened as firms secured international orders.

Price pressures also intensified for manufacturers. Overall expenses increased with container, material and labour costs rising since November, the survey said.

The increase in selling prices was among the highest seen in around 20 years, it said.

Lam said, "The rise in input prices eased slightly, wrapping up the year when Indian manufacturers felt the strain of sharp cost pressures."

On a positive note, manufacturing employment rose for the tenth consecutive month in December, with hiring at a four-month high. "Around one-in-ten companies recruited extra staff, while fewer than 2% of firms shed jobs," the survey mentioned.

Outlook for 2025 was positive with manufacturers anticipating a rise in output, though concerns about inflation and competitive pressures persist.