India’s December manufacturing PMI at 18-month low of 54

India’s December manufacturing PMI at 18-month low of 54.9 vs 56.0 in November

India’s manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, was recorded at an 18-month low of 54.9 in December as against 56.0 in November. Despite the fall, the HSBC India Manufacturing PMI was indicative of a marked improvement in the health of the sector. “The HSBC India Manufacturing PMI survey, conducted by S&P Global, showed the sector still expanding strongly in December despite a loss of growth momentum. There were softer, albeit sharp, increases in factory orders and output, while business confidence towards the year-ahead outlook strengthened,” it said. The input costs rose at the second-slowest rate in nearly three-and-a-half years and charge inflation softened to a nine-month low, it added.

The latest reading was above the long-run series trend, but contributed to the lowest quarterly average (55.5) since Q1 fiscal year 2022-23.

Per the panelists, new business gains, favourable market conditions, fairs and expositions collectively induced another sharp increase in manufacturing production during December. That said, the rate of expansion softened to the weakest since October 2022 even as it remained above its long-run average. According to the report, the growth was reportedly curbed by fading demand for certain types of products.

New orders placed with Indian manufacturers rose sharply but to a lesser extent in December. The pace of expansion was the slowest seen in a year-and-a-half. In terms of international receipts, December data showed a twenty-first consecutive increase and gains were noted from clients in Asia, Europe, the Middle East and North America. New export sales, it added, expanded at a moderate pace that was the joint-slowest in eight months.

Goods producers signalled a further uptick in purchasing costs at the end of the 2023 calendar year. Among the items reported to have been up in price were chemicals, paper and textiles.

“Elsewhere, HSBC India PMI data showed a general lack of pressure on the capacity of manufacturers at the end of the third fiscal quarter. This was evidenced by only a marginal uptick in outstanding business volumes. Subsequently, employment was largely stable in December, with the respective seasonally adjusted index registering only fractionally above the 50.0 no-change mark,” it said.

When assessing the year-ahead outlook for production, Indian manufacturers were at their most upbeat for three months. Anecdotal evidence highlighted advertising, better customer relations and new enquiries as the main factors boosting business confidence in December.