The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 55.0 in December from 56.6 in November, marking a 38-month low. A reading above 50 indicates expansion, meaning the sector remained firmly in growth territory despite the slowdown.
The survey showed that new business continued to rise, but at the slowest pace since December 2023. Factory output also increased, though growth was the weakest since October 2022, reflecting softer demand and growing competition in some segments. Export orders lost momentum, rising at the slowest pace in 14 months.
Manufacturers said overseas demand was largely limited to Asia, Europe and the Middle East, with fewer firms reporting gains in international sales compared with earlier in 2025.
With pressure on production easing, companies turned more cautious on hiring and raw material purchases. Job creation remained muted and was the weakest since the current expansion phase began in March 2024, while input buying grew at its slowest pace in two years.
On the inflation front, cost pressures stayed subdued. Input prices rose only marginally, among the lowest levels seen last year, while output price inflation eased to a nine-month low, suggesting limited pressure on consumer prices.
Despite the loss of momentum, manufacturers ended 2025 on a relatively stable footing. Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said strong new business inflows and low inflation could support activity in the coming months.
However, business confidence weakened, slipping to its lowest level in nearly three-and-a-half years, as firms cited intense competition and market uncertainty even as they remained hopeful about growth in 2026.
