Analysing India's manufacturing health: Key trends from the HSBC PMI December 2025

New Delhi: India’s manufacturing sector closed the calendar year 2025 on a stable note despite easing growth momentum, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI) released on Friday.

Manufacturers continued to report solid, though softer, expansion in new orders and output, even as competitive pressures and subdued demand for certain products weighed on growth rates.

The HSBC survey showed that the final months of 2025 were marked by a slowdown across several key indicators tracked by the PMI. While positive demand trends continued to support sharp increases in new business and production, the pace of expansion moderated.

Employment growth slowed to its weakest level in the current 22-month phase of job creation, while the rise in input buying was the least pronounced in two years, reflecting cautious business sentiment.

Input cost pressures remained muted. “As seen over the previous two months, input costs rose at a historically negligible pace, while selling price inflation eased to a nine-month low,” the PMI report noted.

The seasonally adjusted HSBC India Manufacturing PMI fell to 55.0 in December from 56.6 in November, marking the weakest improvement in sector health in two years. Despite the decline, the index remained comfortably above its long-term average, signalling continued expansion.

The survey indicated that softer growth in overall sales was partly due to a slowdown in international demand. New export orders rose at the slowest pace in 14 months, although firms reporting growth cited stronger demand from Asia, Europe and the Middle East.

“A softer increase in new business intakes prompted companies to limit the extent to which inputs were purchased. Buying levels still rose substantially, but the rate of growth retreated to a two-year low,” the report said.

With operating capacity pressures remaining limited, factory hiring rose only marginally in December. The pace of job creation was the slowest since the current growth phase began in March 2024.

Commenting on the data, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said India’s manufacturing sector had ended 2025 in good shape despite the moderation in growth.

“Even with growth momentum easing, India's manufacturing industry wrapped up 2025 in good shape. The sharp rise in new business intakes should keep companies busy as we head into the final fiscal quarter, and the lack of major inflationary pressures could continue to support demand,” she said.

She added that export growth had softened steadily, with the share of firms reporting higher overseas sales in December roughly half the 2025 average. Export activity remained concentrated in Asia, Europe and the Middle East.

“We have seen a steady spell of softer growth in new export orders. In fact, the share of companies signalling higher international sales in December was about half of the average for 2025. The survey's anecdotal evidence has also pointed to a narrower range of export destinations, with goods mainly heading to Asia, Europe and the Middle East. With Indian manufacturers facing less intense cost pressures than elsewhere, many will be hoping that competitive pricing can help bring in new business from other regions in the new year,” De Lima said.

ANI