India's December Manufacturing PMI Hits 18-Month Low Amid Output Decline

04 Jan, 2024

In December, India witnessed a notable slowdown in manufacturing activity, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) reporting a dip to 54.9, marking an 18-month low.

This decline is significant, given the previous readings of 56 in November and 55.5 in October. The current value is the lowest since October 2022 when the PMI was at 55.3. It's crucial to note that a PMI above 50 indicates expansion, while below 50 suggests contraction.

The contributing factors to this downturn include a diminishing demand for specific product types. Despite a substantial rise in new orders, the growth pace in December was notably slower compared to preceding months. Both output and new orders experienced a softening trend. However, the future output index exhibited an upward trajectory since November.

Pranjul Bhandari, the chief India economist at HSBC Securities and Capital Markets, highlighted that the slowdown was influenced by a decrease in demand for certain products. While input and output prices remained relatively stable, the rates of increase showed no significant changes. This data signals a nuanced landscape in India's manufacturing sector, emphasizing the need for a comprehensive understanding of the varied factors affecting its growth and performance.

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