In December, India’s manufacturing sector experienced a slowdown, hitting an 18-month low due to a milder rise in factory orders and output, despite minimal inflation, as indicated by the monthly HSBC India Manufacturing PMI survey conducted by S&P Global.
The survey revealed a noteworthy yet softened increase in factory orders and output, resulting in the HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropping from 56 in November to a low of 54.9 in December. In PMI terms, a score above 50 signifies expansion, while below 50 indicates contraction.
Pranjul Bhandari, Chief India Economist at HSBC, highlighted the sector’s continued expansion in December, albeit at a slower pace than the previous month. Both output and new orders showed softened growth, while the index for future output increased since November, reflecting improved business confidence for the year ahead.
Despite this slowdown, the sector maintained robust expansion in December, buoyed by new business gains, favorable market conditions, and various industry events fostering another sharp rise in manufacturing production, according to respondents.
The survey highlighted the 21st consecutive rise in international orders received by Indian goods producers, with companies noting gains from clients across Asia, Europe, the Middle East, and North America. However, new export sales expanded at a moderate pace, marking the joint-slowest rate in eight months.
On the pricing front, input costs increased at the second-slowest rate in almost three-and-a-half years, leading to a decline in charge inflation to a nine-month low. While certain items like chemicals, paper, and textiles saw price hikes, the overall inflation rate remained minimal, almost unchanged from November and historically weak.
The HSBC India PMI data indicated limited pressure on manufacturers’ capacity at the end of the third fiscal quarter, contributing to relatively stable employment levels in December.
Looking ahead, Indian manufacturers displayed heightened optimism for production in the coming year, citing factors such as advertising, improved customer relations, and new inquiries as key drivers of business confidence in December, according to the survey's anecdotal evidence.
(With Agency Inputs)
ALSO READ | 40 Companies, Eyeing Nearly Rs 70,000 Cr Through IPOs, Let Approval Lapse in 2023
