According to the most recent HSBC poll, India’s industrial activity dropped to its lowest level in two years in December, reflecting weaker market conditions and more cautious production tactics by businesses.
In December, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropped from 56.6 in November to 55. The result indicated the slowest improvement in the sector’s health in two years, although it was still firmly in expansion territory above the neutral 50 line.
In the current 22-month period of job creation, domestic employment growth decreased to its lowest rate. Alongside the slower output growth, purchasing activity also increased at the slowest rate in two years. The relevant index hovered near the neutral 50 point, indicating a restricted accumulation of backlogs, while outstanding business volumes increased only slightly.
Inventory patterns continued to be inconsistent. As manufacturers reportedly reduced inventories to meet current sales, input inventories increased dramatically while completed goods stockpiles fell at one of the fastest rates in the previous eight months. On the other hand, due to cautious purchasing and increased use of already-existing resources, the increase in stock of purchases was the lowest in two years.
In December, cost pressures remained moderate. Higher costs for bamboo, chemicals, glass, leather, and packaging caused input prices to slightly increase, but inflation was still below its long-term average and among the lowest in 2025. Inflation in output prices also decreased to a nine-month low.
Although overall sentiment declined to a nearly three-and-a-half-year low, manufacturers are nevertheless confident about increased output in 2026. Advertising, the introduction of new products, and favorable demand patterns were mentioned as advantages, while worries about market unpredictability and competitive pressures undermined confidence.
