December 17, 2024
The Composite PMI, compiled by S&P Global, reflects stronger demand in both services and manufacturing sectors, driving record job creation
The services sector led the momentum, with its PMI rising to 60.8 from November’s 58.4, supported by robust domestic and international demand
Manufacturing PMI also climbed to 57.4 in December, driven by increased production, new orders, and employment gains
Eased inflationary pressures contributed to improved business sentiment, with overall optimism at its highest since September 2023
According to the latest survey data, India’s private sector recorded its strongest growth in four months in December, bolstered by increased demand in services and manufacturing alongside unprecedented job growth. This marks a positive end to 2024 for Asia’s third-largest economy, which grew by a softer 5.4% last quarter. Easing inflation is expected to spur private sector demand further, improving economic prospects for the year ahead.
The HSBC December flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 60.7 in December from November’s 58.6. This reading equalled August’s high and remained well above the 50-level threshold, signalling robust expansion. The business activity index has consistently stayed above 60 in all but three months this year, a performance unmatched since the 2008 global financial crisis.
According to HSBC economist Ines Lam, December’s slight increase in the manufacturing PMI was attributed to stronger production, rising new orders, and employment gains. She noted that accelerating growth in domestic orders suggested an uptick in overall economic momentum.
The services sector, which accounts for the largest share of India’s economy, saw its PMI climb to a four-month high of 60.8, compared to 58.4 in November. Service providers led sales growth, with new business hitting its highest level since January. International demand for goods and services also rose, though the increase in goods demand outpaced that of services.
Buoyed by the improved outlook, businesses ramped up hiring at a record pace. Both the manufacturing and services sectors posted their highest employment generation levels since the survey’s inception in 2005. Business optimism for 2025 soared to its strongest point since September last year.
Inflationary pressures eased slightly after two months of sharp increases. While firms continued to raise selling prices, the pace of increases slowed from November’s near 12-year high. This moderation in inflation offers some relief to the newly appointed Reserve Bank of India Governor, Sanjay Malhotra.
According to a Reuters poll, lower-than-expected consumer inflation of 5.48% in November has strengthened expectations for a rate cut in February 2025. The combination of cooling inflation, sustained demand, and strong job growth positions India’s economy for robust performance in the coming year.
Source: Reuters