India’s manufacturing sector showed signs of cooling in December, with growth easing to its slowest pace in two years, according to the latest HSBC India Manufacturing PMI. Despite the slowdown, activity remained above its long-term average, indicating continued expansion.
The seasonally adjusted PMI slipped to 55.0 in December, down from 56.6 in November, marking the weakest improvement in overall manufacturing conditions since December 2023. Any reading above 50 signals expansion in the sector.
Growth in new orders slowed to its softest rate in a year, while output expansion weakened to its lowest level since October 2022. Export demand also lost momentum, with new export orders rising at the slowest pace in 14 months. Firms reported overseas demand mainly from Asia, Europe, and the Middle East.
As new business growth moderated, manufacturers became more cautious with input purchases. While buying activity continued to rise, the pace of increase dropped to a two-year low.
Hiring conditions also softened. Employment rose only slightly in December, recording the weakest job growth during the current 22-month expansion phase that began in March 2024.
On the cost side, input price pressures remained muted, increasing at a historically minimal pace. Companies cited higher costs for materials such as bamboo, chemicals, glass, leather, and packaging. Meanwhile, output price inflation eased to a nine-month low, offering some relief to producers.
Commenting on the data, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said that despite easing momentum, India’s manufacturing sector ended 2025 in a solid position. She noted that strong order inflows should keep factories busy into the final fiscal quarter, while limited inflation pressures may help sustain demand.
However, business confidence for output in 2026 weakened, falling to its lowest level in nearly three and a half years. While firms pointed to advertising efforts, steady demand, and new product launches as potential growth drivers, concerns around competition and broader market uncertainty weighed on sentiment.
