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India's manufacturing sector has seen a notable increase in employment for the 10th consecutive month, as reported for December 2024. The job creation rate has also accelerated, reaching its fastest pace in four months.

 

According to the HSBC India Manufacturing PMI report, approximately one in ten companies hired additional staff, while fewer than two percent of firms reduced their workforce.

 

The report attributes the surge in employment to an uptick in new work intakes, prompting manufacturing companies across India to purchase additional inputs for their production processes.

 

The growth rate of these inputs remained above the long-term trend, indicating a positive outlook for the sector.

 

Despite the overall positive trend, the country's manufacturing activity ended 2024 on a somewhat softer note. This slowdown, although moderate, signals a cooling off in industrial activity.

 

Nevertheless, there was some optimism, particularly regarding new export orders. These orders grew at the fastest pace since July, which provided a welcome uplift to the sector's performance.

 

The report also notes a slight easing in the rise of input prices, marking the end of a year in which Indian manufacturers faced significant cost pressures.

 

Although export sales grew at a slower rate compared to total new business, the rate of growth for international orders strengthened. This is attributed to firms securing international contracts, which helped offset domestic pressures.

 

In terms of capacity pressures, Indian manufacturers experienced mild strain, with only a slight increase in work that was pending completion or yet to start. This indicates that while there is some pressure on production schedules, it remains manageable for the most part.

 

Looking ahead to 2025, there is a strong sense of optimism among Indian manufacturers. Confidence in the sector is supported by expectations of increased output, driven by higher advertising spending, investments, and favourable demand forecasts.

 

However, concerns over inflation and competitive pressures slightly dampen this optimism, with some companies cautious about the potential impact these challenges could have on growth.