India's manufacturing PMI eases to 55 in December, at 38-month low

December manufacturing PMI: New business continued to grow at a strong rate, but the pace was the slowest since December 2023

India’s manufacturing sector continued to grow in December, though at a slower pace, with the HSBC Manufacturing Purchasing Managers’ Index (PMI) slipping to 55.0 in December from 56.6 in November, marking a 38-month low, according to S&P Global.

 

Despite the fall, the index stayed well above the 50 mark, which separates growth from contraction.

 

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said that despite the slowdown, India’s manufacturing sector ended the year on a solid footing. “The sharp rise in new business intakes should keep companies busy as we head into the final fiscal quarter, and the lack of major inflationary pressures could continue to support demand,” she said.

 

New orders at 2-year low

New business continued to grow at a strong rate in December, but the pace was the slowest since December 2023. Factory output also expanded, though at its weakest rate since October 2022. The slower rise in orders led companies to be more cautious while buying raw materials, even though overall purchases rose.

Exports at 14-month low

Growth in export orders weakened during the month, with international demand rising at the slowest pace in 14 months. Manufacturers who saw growth pointed to better demand from Asia, Europe and the Middle East as key drivers.

 

De Lima pointed to weaker export growth, noting, “We have seen a steady spell of softer growth in new export orders. In fact, the share of companies signalling higher international sales in December was about half of the average for 2025.”

 

She added that exports were limited to fewer markets, with goods largely going to Asia, Europe and the Middle East. “With Indian manufacturers facing less intense cost pressures than elsewhere, many will be hoping that competitive pricing can help bring in new business from other regions in the new year,” De Lima said.

Job creation remains muted

With less pressure on production capacity, manufacturers added only a small number of workers in December. Job creation was the weakest since the current growth phase began in March 2024. Unfinished work rose slightly, showing that companies were largely able to manage their workloads at existing capacities.

Forward outlook

Manufacturers remain positive about output growth in 2026, but confidence has dropped to its lowest level in nearly three-and-a-half years. While advertising, steady demand and new product launches offer support, some firms remain worried about strong competition and uncertainty in the market.