India’s Manufacturing PMI Dips to 18-Month Low at 54.9 in December


January 3, 2024

New Delhi, India

India’s Manufacturing PMI Records a Dip in December

India’s manufacturing sector closed in 2023 with uncertainty as the Purchasing Managers’ Index (PMI), a key indicator of industrial health, fell to 54.9 in December. This marked a decline from November’s 56.0, reflecting a noticeable slowdown in the rate of expansion.

Sustained Growth, Yet Signs of Slowdown

Despite the drop, the PMI has maintained its position above the crucial 50-mark for the 30th consecutive month. This suggests that the sector is still experiencing growth, but the recent decrease signals a potential deceleration in the pace.

Components Analysis – Weakness in New Orders and Output

The decline in the December PMI is attributed to a weaker increase in new orders and manufacturing output. The pace of new order growth hit a year-and-a-half low, contributing to the lowest manufacturing output growth since October 2022.

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International Orders Offer a Silver Lining

While domestic demand faces challenges, the report highlights a positive trend in international orders, continuing to rise for the 21st consecutive month. However, it’s worth noting that new export sales grew at their slowest pace in eight months, indicating a potential moderation in international demand.

S&P Global’s Perspective and Industry Health

S&P Global views the December PMI as indicative of an improvement in the sector’s health. Although the reading is above the long-term trend, it contributes to the lowest quarterly average (55.5) since Q1 2022-23, signaling recent weakening.

Challenges with Fading Demand for Specific Products

The report underscores a challenge in the form of fading demand for certain types of products, impacting the growth in manufacturing output. This could reflect changes in consumer preferences or broader economic factors affecting specific product categories.

In conclusion, India’s manufacturing sector continues to expand, but the December PMI suggests a slowdown in growth. Challenges in new orders and output, coupled with a moderation in international demand for specific products, pose concerns for the sector’s overall health.


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