India’s manufacturing activity slowed to an 18-month low last month on weaker growth in factory orders and output.
The HSBC Indian Manufacturing Purchasing Managers’ Index (PMI), conducted by S&P Global, eased to 54.9 in December against 56 the previous month and 55.5 in October.
A PMI reading above 50 indicates expansion, while a reading below that denotes contraction.
The December number is the lowest since October 2022, when PMI came in at 55.3.
“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. Rates of increase in input and output prices were broadly unchanged,” Pranjul Bhandari, chief India economist at HSBC, said.
New business gains, favorable market conditions, fairs and expositions collectively induced another sharp increase in manufacturing production during December, according to the about 400 panelists who were surveyed.
December data showed a 21st consecutive increase in global order receipts, with companies noting gains from clients in Asia, Europe, the Middle East and North America.
In terms of output, new orders placed with Indian manufacturers saw a sharp rise in December, although the expansion rate was the slowest in a year-and-a-half, the survey said.
Manufacturers pointed to a further uptick in purchasing costs, especially of chemicals, paper and textiles, at the end of the calendar year.
The rate of inflation, however, was negligible by historical standards and was the second-weakest in just under three-and-a-half years, it added.
On the outlook for the year ahead, the survey said that the respondents were the most upbeat in three months.
“Anecdotal evidence highlighted advertising, better customer relations and new enquiries as the main factors boosting business confidence in December,” it added.
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