What's Happening?
Manufacturing activity in India experienced a slowdown in December, marking the slowest improvement in the sector's health in two years. According to a survey, the HSBC India Manufacturing Purchasing Managers'
Index (PMI) decreased from 56.6 in November to 55.0 in December. This decline indicates a moderation in export orders and employment within the sector, alongside a drop in business sentiment to its lowest in nearly three and a half years. Despite the slowdown, the PMI remained above its long-run average, with the 50-point mark separating expansion from contraction. The survey compiled responses from 400 manufacturing companies, highlighting the challenges faced by the sector.
Why It's Important?
The slowdown in manufacturing activity is significant as it reflects broader economic challenges that could impact the sector's contribution to the economy. A decrease in export orders and employment suggests potential vulnerabilities in the global supply chain and domestic market conditions. The decline in business sentiment could lead to reduced investment and slower growth in the manufacturing sector, affecting related industries and economic stakeholders. This development may prompt policymakers to consider measures to stimulate growth and address underlying issues affecting the sector's performance.
