India's Manufacturing Sector Shows Resilience with Strong Job Growth

In December 2024, India's manufacturing sector demonstrated resilience as employment rose for the tenth consecutive month, reaching a four-month high. Despite a slight PMI decline to 56.4, indicating a soft finish to the year, the sector maintained robust growth, bolstered by strong export demand and a moderated input price increase.

India's manufacturing sector exhibited ongoing resilience in December 2024. Employment rates rose for the tenth month in succession, achieving the fastest pace of job creation in four months, as reported by the HSBC India Manufacturing Purchasing Managers' Index (PMI). Approximately 10% of businesses reported workforce expansion, highlighting sustained optimism within the industry.

The PMI fell to 56.4 in December, the lowest of the year, but still indicated strong growth, as the figure stayed above the long-term average of 54.1. Despite the drop from November's 56.5 and the 'flash' estimate of 57.4, the sector showed robust performance, although signs of moderation appeared in production, new orders, and inventories.

Ines Lam, an economist at HSBC, noted, "India's manufacturing activity ended the year on a soft note with more signs of a slowing trend, although moderate, in the industrial sector." Despite slower new order growth hinting at future production challenges, rising new export orders offered a positive outlook, fueled by the fastest pace since July and easing input cost pressures.

Factory output and new orders expanded at a slower rate due to rising competition and pricing pressures. December marked the slowest pace of expansion for 2024, yet firms cited successful advertising and positive client sentiment as key sales drivers. International demand provided relief, growing at its fastest pace since July, offsetting weaker domestic orders.

While input cost pressures eased, firms successfully increased selling prices due to resilient demand, helping maintain profit margins despite increased container, material, and labor costs. This pricing strategy was supported by favorable market conditions. (ANI)

(With inputs from agencies.)