India’s private sector ended 2024 on a strong note, with the HSBC Flash India Composite Output Index rising to 60.7 in December, up from 58.6 in November. This marks the strongest expansion since August 2024, according to HSBC data compiled by S&P Global. The growth was driven by significant improvements in both manufacturing and services, underscoring India’s economic resilience and steady recovery.
The HSBC Flash India Manufacturing PMI climbed to 57.4 in December from 56.5 in November, reflecting stronger business conditions. The rise was fueled by increases in production, new orders, and employment, supported by solid domestic demand. Manufacturers ramped up input purchases to meet growing demand, and pre-production inventories expanded. However, finished goods stocks fell as firms utilized inventory to address rising orders.
The manufacturing sector also saw a marked increase in export orders, which grew at the fastest rate in five months. The surge in demand helped push the sector’s performance, particularly in export markets.
Meanwhile, the services sector remained a key engine of India’s economic growth. The HSBC Flash India Services PMI Business Activity Index surged to 60.8 in December, up from 58.4 in November, reflecting strong increases in sales and backlogs. Service providers experienced robust demand, both domestically and internationally, reinforcing the sector’s resilience.
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December also saw a significant rise in workforce expansion, with private sector firms adding both permanent and temporary staff at the fastest pace in the survey’s history. The increase in hiring coincided with a sharp rise in backlogs of work, which grew at their fastest rate since May 2024. This indicates the growing workload faced by businesses as demand continues to rise.
Demand for Indian goods and services reached its highest level since July, fueled by strong growth in both domestic and international orders. New export orders, in particular, experienced sharp growth, with the manufacturing sector leading the charge in export performance.
Despite the positive momentum, businesses continued to face cost pressures. According to Ines Lam, Economist at HSBC, “The modest rise in the manufacturing PMI in December was largely supported by gains in current production, new orders, and employment. Domestic orders saw an accelerated expansion, indicating improved growth momentum. At the same time, input cost pressures persisted, prompting manufacturers to raise selling prices.”
The output price index reached its highest level since February 2013, although firms raised prices at a slower pace compared to November’s near 12-year peak. Challenges related to food, freight, and labor costs remained significant, continuing to affect business operations.
Despite these challenges, business optimism strengthened for the second consecutive month, reaching its highest point since September 2023. Positive demand conditions and stronger customer relationships have bolstered confidence among both manufacturers and service providers, setting a hopeful tone for India’s economic outlook in 2025.
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