Indian Economy Ends 2024 on a Strong Note; December Composite PMI at 60.7
New Delhi, December 16 – India’s economic momentum showed a strong end to 2024, with the HSBC Flash India Composite Output Index rising to 60.7 in December, up from 58.6 in November. This marks the strongest expansion in the Indian economy since August 2024, as reported by HSBC, compiled by S&P Global.
India’s private sector experienced robust growth in December, registering its highest performance in four months. Both the manufacturing and services sectors saw accelerated growth, driven by a rise in new business inflows and increased job creation.
The HSBC Flash India Manufacturing PMI rose to 57.4 in December from 56.5 in November, signaling improved business conditions. Gains in production, new orders, and employment fueled the recovery, with a rise in domestic demand playing a pivotal role.
Meanwhile, the services sector continued to lead growth, reflected in the HSBC Flash India Services PMI Business Activity Index, which climbed to 60.8 in December, up from 58.4 in November. Service providers recorded a sharper increase in sales and backlogs, showcasing the sector’s resilience.
Private sector firms also expanded their workforce significantly in December, with job creation reaching a new survey peak. Employers added both permanent and temporary staff to meet the growing demand, and backlogs of work rose at the fastest pace since May 2024.
Ines Lam, Economist at HSBC, stated, “In this flash release, the small rise 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 quickened, suggesting a pick-up in growth momentum in the economy.” Lam also noted that sustained increases in input costs have prompted manufacturers to continue raising selling prices. The output price index rose to its highest level since February 2013.
Demand for Indian goods and services experienced its sharpest increase since July, with both domestic and international orders contributing to growth. New export orders expanded at the fastest rate in five months, with the manufacturing sector outperforming services in export growth.
Business optimism strengthened for the second consecutive month, reaching its highest level since September 2023. Manufacturers and service providers alike expressed positive demand expectations, with stronger customer relations boosting their confidence.
Although cost pressures eased slightly from the 15-month high seen in September, input costs for items like food, freight, and labor continued to rise. Despite this, firms increased selling prices, though at a slower rate than November’s near 12-year high.
Manufacturers stepped up input purchases in December, benefiting from improved vendor performance. Pre-production inventories grew, while finished goods stocks contracted as companies utilized inventory to meet rising demand.
