Activity in the manufacturing sector tumbled to an 18-month low of 54.9 in December amid a softer increase in factory orders and output, despite minimal inflation, a monthly survey said.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 56 in November to an 18-month low of 54.9 in December.

The HSBC India Manufacturing PMI survey, conducted by S&P Global, showed that there were softer increase in factory orders and output, while business confidence towards the year-ahead outlook strengthened.

In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“India’s manufacturing sector activity 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 manufacturing PMI survey for December suggests that activity lost some momentum at the end of 2023.
That said, we think that activity in the sector is likely to hold up well in 2024 and that India will maintain its standing as one of the fastest-growing major EM economies,” said Thamashi De Silva, assistant economist, CapitalEconomics.

On the prices front, input costs rose at the second-slowest rate in nearly three-and-a-half years and charge inflation softened to a nine-month low.