Dec manufacturing growth falls on slower output, sales

PMI falls to 55, but stays above long-term trend; export orders growth slowest in 14 months

- Subhash Narayan

India's manufacturing purchasing managers index (PMI) fell to 55.0 in December from 56.6 in November, marking the weakest improvement in the health of the sector in two years.

The decline was driven by weaker growth in output and sales, with positive sentiment towards output prospects slipping to its lowest level since October 2022 and new export orders rising at their slowest pace in 14 months.

The PMI figure is compiled by S&P Global and released by HSBC, and a reading above 50 indicates an expansion in activity. The December reading was also above its long-run average of 54.2.

The manufacturing PMI indicates the health of the manufacturing sector, signaling expansion, contraction or stagnation in areas such as new orders, production, employment, and inventories, making it a crucial, early indicator of overall economic trends and future growth for businesses, investors, and policymakers

Despite the month-on-month fall in the PMI, India's manufacturing industry registered another round of impressive growth, with total new orders and output again expanding at above-trend rates, though at a slower pace than earlier, according to the survey.