India’s economy wrapped up 2024 on a solid footing, driven by strong growth in both manufacturing and services sectors. Preliminary data from HSBC’s December flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, revealed an increase to 60.7, up from 58.6 in November. This marks the fastest growth in private sector output in four months, signaling a strong finish for Asia’s third-largest economy.
PMI reflects strength in manufacturing and services
The PMI’s December reading matched August’s peak, maintaining its position above the 50-level, which separates growth from contraction. Notably, the index has stayed above 60 for most of the year, a resilience last observed before the 2008 global financial crisis.
“The small rise in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders, and employment,” said Ines Lam, economist at HSBC.
Manufacturing PMI increased to 57.4 from 56.5, while the services sector PMI rose to 60.8 from 58.4, reflecting strong demand across both sectors. Service providers led in sales growth, with the new business sub-index hitting its highest point since January.
Record employment and optimism for 2025
A notable highlight of the report was record-breaking job creation. Both manufacturing and services sectors posted the fastest employment growth since the survey began in 2005. Rising international and domestic demand bolstered business confidence, lifting overall optimism to its highest since September 2023.
Easing inflation supports growth
Inflationary pressures eased in December, offering relief to businesses and consumers. After two months of steep rises, firms reported slower price increases. Consumer inflation dipped to 5.48% in November, raising expectations of a potential rate cut by the Reserve Bank of India in early 2025.
Outlook for 2025
As inflation stabilizes and demand surges, India’s private sector is poised for sustained growth. The easing of price pressures, combined with a robust labor market and increased international demand, paints an optimistic picture for the coming year.
India’s economic momentum, supported by balanced growth in manufacturing and services, demonstrates its resilience and adaptability. With businesses ramping up production and hiring, 2025 is set to be a year of expansion and innovation for the Indian economy.
