India’s Manufacturing Purchasing Manager’s Index (PMI) for December 2024 dropped to 56.4, marking the lowest point in the last 12 months. Just a month earlier, in November, the PMI stood slightly higher at 56.5. This dip reflects softer demand, reduced output, and slower growth in new orders, signaling that manufacturing activity ended the year on a weaker note.
Experts at S&P Global observed that the sector’s growth was held back by slower increases in production, new orders, and stock purchases. While the pressure of rising costs eased, the prices that manufacturers charged for goods remained high by historical standards. Economists noted that manufacturing activity started 2024 on a strong footing but gradually weakened as the year progressed. The sharpest PMI reading for the year was 59.1 in March, but a steady decline set in during the second half, leading to December’s sluggish performance.
Source: S&P Global India Manufacturing PMI
Ines Lam from HSBC highlighted that weak new orders might result in slower growth in future production, which could impact the momentum of the manufacturing sector. Competition and rising costs were major challenges for manufacturers throughout the year. While export sales increased, they grew more slowly than total new business. Still, some firms managed to leverage international orders to support growth.
December saw moderate increases in input prices, but selling prices rose at a faster pace, reflecting strong pricing power among manufacturers. This was one of the highest pricing power trends seen in the past two decades. Looking ahead, manufacturers remain optimistic about 2025. Many believe that favorable demand, higher investments, and advertising will support growth. However, concerns about inflation and competition continue to linger.
The Finance Ministry shares this positive outlook for the future, predicting that industrial activity will pick up in the latter half of FY25. They also expect growth in capital formation to rebound, which could provide much-needed support to the sector’s recovery. Despite the challenges, the optimism for the coming year reflects hope for a stronger manufacturing landscape in India.