The manufacturing industry in India concluded 2023 on a softer note with factory growth slowing down to a low not seen in the last eighteen months in December.
According to the HSBC India Manufacturing Purchasing Managers' Index, compiled by S&P Global, the index dropped to 54.9 in December from 56.0 in November due to a less robust increase in new orders and output.
However, the reading remained above the 50-point threshold that distinguishes expansion from contraction, marking the 30th consecutive month of growth.
"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," said Pranjul Bhandari, chief India economist at HSBC.
The survey indicated that while new orders placed with Indian manufacturers saw a significant increase in December, the rate of growth was the slowest in 18 months.
On a brighter note, the survey indicated that the input costs for manufacturers rose at the second-slowest rate in nearly three-and-a-half years.
In addition, manufacturers were at their most upbeat in three months about the coming year.
The data from December indicated a rise in international order receipts at goods manufacturers in India.
Companies noted gains from clients in Asia, Europe, the Middle East and North America.
However, the growth in new export sales was moderate and represented the least rapid expansion in eight months.
For the fourth consecutive month, the rate of inflation for charges exceeded that of input prices. Companies that increased their fees in December attributed it to passing on recently absorbed cost burdens to clients.
According to HSBC India PMI data at the end of the third fiscal quarter, there was negligible pressure on the manufacturing sector's capacity.
Employment remained relatively stable in December, with the seasonally adjusted index just slightly above the no-change mark of 50.0.
Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.
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