India's manufacturing growth in December cools to 18-month low on weaker new orders, output

India's manufacturing industry ended 2023 on a slightly shaky footing as factory growth decelerated to an eighteen-month low in December, pressured by a weaker rise in new orders and output, , according to HSBC India Manufacturing Purchasing Managers' Index, Compiled by , compiled by S&P Global, the index fell to 54.9 in December from November's 56.0. Still, the reading was above the 50-mark separating growth from contraction for a 30th straight month.

"India's manufacturing sector continued to expand in December, although at a softer pace, following an uptick in the previous month. Growth of both output and new orders softened, but on the other hand, the future output index rose since November," said Pranjul Bhandari, chief India economist at HSBC.

New orders placed with Indian manufacturers, according to the survey, rose sharply but to a lesser extent in December. The pace of expansion was the slowest seen in 18 months.


On the positive side, input costs for manufacturers rose at the second-slowest rate in nearly three-and-a-half years, the survey said. In addition, manufacturers were at their most upbeat in three months about the coming year.

December data also showed an increase in international order receipts at goods producers in India. Companies noted gains from clients in Asia, Europe, the Middle East and North America. However, new export sales expanded at a moderate pace that was the slowest in eight months.

For the fourth consecutive month, the rate of inflation for charges exceeded that of input prices. Companies that increased their fees in December attributed it to passing on recently absorbed cost burdens to clients. HSBC India PMI data for the end of the third fiscal quarter indicated minimal pressure on manufacturers' capacity. Employment remained relatively stable in December, with the seasonally adjusted index just slightly above the no-change mark of 50.0.