The manufacturing growth slipped to a 12-month low in December as new business orders and production expanded at a more moderate pace, according to a survey released on Thursday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), seasonally adjusted and compiled by S&P Global, registered 56.4 in December, down slightly from November’s 56.5.

While signalling a slower rate of improvement in operating conditions,
the reading remained well above the long-run average of 54.1, indicating robust growth.

In PMI terms, a figure above 50 reflects expansion, while below 50 signals contraction.

“India’s manufacturing activity ended a strong 2024 on a softer note, showing more signs of a gradual slowdown in the industrial sector,” said Ines Lam, an economist at HSBC. “The rate of growth in new orders was the weakest of the year, pointing to a potential easing in production momentum ahead.”

The sector’s expansion faced challenges from heightened competition and price pressures, though there were bright spots in export demand. New export orders grew at their fastest pace since July even as overall business orders rose slowly.

“Firms managed to secure international orders, contributing to a stronger growth rate for export sales compared with previous months, although total new business expanded at a slower pace,” it noted. The steady inflow of new work spurred manufacturers to raise purchasing activity and employment levels.

Around 10 per cent of surveyed firms hired additional staff, while fewer than 2 per cent reduced their workforce. The sector also reported increased buying activity as companies stocked up on inputs to support ongoing production needs.

On the pricing front, manufacturers continued to face rising costs for materials, labour, and container shipments. Input prices grew at a moderate rate compared with historical trends but still weighed on overall expenses.