The HSBC Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 55 last month from 56.6 in November and 56.4 in December 2024. Despite the December slowdown, manufacturing activity remained resilient through 2025, averaging 57.8 for the year compared with 57.5 in 2024.
A reading above 50 indicates expansion in activity, while below that shows contraction.
“Even with growth momentum easing, India’s manufacturing industry wrapped up 2025 in good shape,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
“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 added.
New business intakes rose at a sharp pace but were the weakest since December 2023. Output growth also slowed, recording its softest pace since October 2022.
“Positive demand trends continued to underpin sharp increases in new business intakes and production, but rates of expansion eased on the back of competitive pressures and subdued sales of specific items,” the survey report said.
Looking ahead, manufacturers expect output to increase in 2026 compared with current levels, though sentiment level slipped to a three-and-a-half year low. Advertising, favourable demand trends and new product launches were cited as positives, while competitive pressures and market uncertainty weighed on confidence.
“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,” said De Lima.
Growth in export orders fell to a 14-month low in December. Companies reporting an increase in overseas demand pointed to higher orders from Asia, Europe and West Asia.
“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,” said De Lima.
Due to a general lack of pressure on operating capacities, job creation slowed to a 22-month low in December.
On the cost front, input prices rose in December, driven by higher prices for bamboo, chemicals, glass, leather and packaging. However, inflation remained below its long-run average and was among the slowest seen in 2025. Similarly, output prices rose at a softer pace, marking the weakest increase in nine months.