India Manufacturing PMI Slows to Two-Year Low in December as New Orders and Hiring Ease

Manufacturing Growth Loses Momentum at Year-End​

India’s manufacturing sector recorded its weakest improvement in nearly two years in December, reflecting softer growth in new orders, restrained input purchases, and limited job creation. The slowdown marked a loss of momentum toward the end of the calendar year, even as overall activity remained in expansion territory.

The seasonally adjusted HSBC India Manufacturing PMI declined to 55 in December from 56.6 in November. In PMI terms, a reading above 50 indicates expansion, while a score below 50 signals contraction.

Production and New Orders Moderate​

December saw a broad-based easing across several indicators tracked by the survey. Production growth slipped to a 38-month low, alongside the weakest rise in new orders in two years. The moderation in demand led manufacturers to scale back purchases of inputs and maintain cautious capacity utilisation.

Despite the softer pace, manufacturing activity closed 2025 on a stable footing, supported by continued inflows of new business and limited inflationary pressures.

Export Demand Shows Softer Trend​

The deceleration in overall sales was partly driven by weaker growth in international orders. New export orders increased at the slowest rate in 14 months. Where growth was reported, manufacturers pointed to demand from Asia, Europe, and the Middle East.

According to the survey commentary, fewer firms reported higher overseas sales in December compared with the average levels seen during 2025, indicating a narrower export footprint toward the year’s end.

Hiring and Input Buying Remain Restrained​

With operating capacity largely under control, factory employment rose only marginally in December. The pace of job creation was the weakest since the current expansion phase began in March 2024.

The softer intake of new business also prompted firms to limit input purchases, reinforcing a cautious approach to scaling operations.

Cost Pressures and Pricing Stay Muted​

On the pricing front, input costs increased at a historically negligible pace. At the same time, output charge inflation eased to a nine-month low, highlighting subdued cost pressures across the manufacturing sector.

The absence of sharp input cost escalation continued to provide relief to producers and supported competitive pricing conditions.

Outlook for 2026 Turns More Guarded​

Looking ahead, Indian manufacturers expect output to rise during 2026 compared with current levels. However, overall business sentiment slipped to its lowest point in nearly three-and-a-half years.

While advertising efforts, favourable demand trends, and new product launches were cited as supportive factors, some firms expressed concerns over competitive intensity and broader market uncertainty.

Commenting on the survey findings, Pollyanna De Lima of S&P Global Market Intelligence noted that easing cost pressures could allow Indian manufacturers to use competitive pricing to attract fresh business in the year ahead.

Survey Methodology​

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from around 400 purchasing managers across the country, offering a timely snapshot of trends in output, demand, employment, and pricing within the manufacturing sector.