India’s economy has shown strong performance as it closes out 2024, with the HSBC Flash India Composite Output Index rising to 60.7 in December, up from 58.6 in November. This marks the highest expansion in economic activity since August 2024, according to data compiled by S&P Global.
India’s private sector recorded robust growth in December, achieving its best performance in four months. Both the manufacturing and services sectors experienced accelerated growth, fueled by a surge in new business orders and significant job creation.
The HSBC Flash India Manufacturing PMI rose to 57.4 in December, up from 56.5 in November, signaling improved business conditions. Gains in production, new orders, and employment were key drivers of this growth, underpinned by a rise in domestic demand.
Meanwhile, the services sector continued to lead the growth, with the HSBC Flash India Services PMI Business Activity Index climbing to 60.8 in December from 58.4 in November. This sharp increase reflects strong sales and growing backlogs, underscoring the resilience of the sector.
Private sector companies also ramped up job creation in December, with employment reaching a new survey high. Employers expanded their workforce with both permanent and temporary staff to meet rising demand, while backlogs of work increased at the fastest rate since May 2024.
Ines Lam, an economist at HSBC, said, “The modest increase in the manufacturing PMI was mainly driven by gains in production, new orders, and employment. The rise in new domestic orders suggests an acceleration in growth momentum for the economy. Moreover, sustained increases in input costs have pushed manufacturers to raise selling prices, with the output price index reaching its highest level since February 2013.”
Demand for Indian goods and services saw the sharpest growth since July, with both domestic and international orders contributing to the surge. New export orders expanded at the fastest pace in five months, with manufacturing outpacing services in export growth.
Business optimism also surged for the second consecutive month, reaching its highest level since September 2023. Expectations of continued demand growth and stronger customer relations contributed to increased confidence among both manufacturers and service providers.
Although cost pressures eased slightly from September’s 15-month high, input costs for items like food, freight, and labor continued to rise. Despite the easing, firms raised selling prices, though at a slower rate than the near 12-year high seen in November.
Manufacturers increased input purchases in December, benefiting from improved vendor performance. Pre-production inventories grew, while finished goods stocks fell as companies utilized inventory to meet rising demand.
(Inputs from ANI)