India's Manufacturing Activity Hits 18-Month Low in December: HSBC PMI

New Delhi, Jan 3 (KNN) India witnessed a notable dip in manufacturing activity, reaching an 18-month low in December, as reported by a private survey on Wednesday.

The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, revealed a decline from 56 in November to 54.9 in December, following the October figure of 55.5.

This downturn marks the slowest expansion since February.

A crucial economic indicator, the PMI reading above 50 signifies expansion, while below 50 indicates contraction.

Despite robust growth reported earlier, with the Indian economy growing at an impressive 7.6 per cent in the second quarter, the recent survey of 400 manufacturers paints a contrasting picture.

The manufacturing sector, however, demonstrated resilience in December, expanding despite a slowdown in growth momentum.

The report noted softer, yet sharp, increases in factory orders and output, with a surge in business confidence regarding the year-ahead outlook.

Challenges to India's economic landscape emerged from a global slowdown, also affecting merchandise exports.

Additionally, interest rate tightening, driven by persistent inflation in advanced economies, contributed to a broader slowdown in business, investment, and trade.

Geopolitical conflicts in Ukraine and West Asia posed threats of pushing up commodity prices, intensifying inflationary pressures.

The latest data on India's Consumer Price Index (CPI) inflation revealed a rise to 5.55 per cent in November, compared to 4.87 per cent in October and 5.02 per cent in September.

While this figure exceeded the Reserve Bank of India's (RBI) 4 per cent target, it remained within the central bank's tolerance range of 2-6 per cent for the third consecutive month, offering some stability amid economic fluctuations.

(KNN Bureau)