India’s private sector showed strong growth in December, its highest performance in four months. Both the manufacturing and services sectors have shown rapid growth, supported by new trade flows and increased job creation.
The HSBC Flash India Manufacturing PMI improved to 57.4 in December, up from 56.5 in November, indicating strong business conditions. Gains in manufacturing, new orders and employment supported growth in domestic demand, leading to a recovery.
The services sector continued to lead the pace of growth, as reflected in the HSBC Flash India Services PMI Business Activity Index, which rose to 60.8 in December from 58.4 in November. Service providers recorded sharp growth in sales and backlogs, highlighting the sector’s resilience.
Private sector firms significantly expanded their workforce in December, with job creation hitting a new survey peak.
Employers added both permanent and temporary staff to meet rising demand, while job backlogs grew at the fastest pace since May 2024.
HSBC economist Ines Lam said, “In this flash statement, the small increase in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders and employment. The expansion in new domestic orders accelerated, suggesting a pick-up. -Growth in the economy is picking up.” The price index reached its highest level since February 2013.”
Demand for Indian goods and services saw its fastest growth since July, with domestic and international orders contributing to the growth.
New export orders expanded at the fastest rate in five months, with manufacturing outperforming the services sector in export growth.
Business optimism strengthened for the second consecutive month, reaching the highest level since September 2023. Positive demand expectations and strong customer relationships boosted confidence among both manufacturers and service providers.
Cost pressure eased slightly from September’s 15-month high, in line with long-term averages. However, input costs for items such as food, rent and labor continued to rise.
Despite the easing of cost pressures, firms increased sales prices, albeit at a slower rate than November’s 12-year high.
Manufacturers increased input purchases in December, benefiting from improved vendor performance. Pre-production inventories rose, but stocks of finished goods shrank as companies used inventory to meet rising demand.