The S&P Global India manufacturing PMI indicates activity in the sector improved to the least extent of the year while remaining strong in December, with the headline index down a tick to 56.4 from 56.5 in November. This is below the flash estimate of 57.4. Less timely industrial production data published last month showed slightly improved conditions in the manufacturing sector in October, with November data scheduled to be published mid-January.

PMI survey respondents reported slower growth in output, new orders, and stocks of purchases, but they said growth in export orders strengthened further as did the growth in payrolls, which expanded at the fastest rate in four months. Respondents also reported easing in input cost inflation, while selling price increases outpaced those of input costs.

India's manufacturing sector ended a strong year on a soft note but manufacturers were confident in their outlook for 2025, anticipating a rise in output. However, optimism based on strong demand was somewhat curbed by inflation concerns and competitive pressures.

The Manufacturing Purchasing Managers' Index (PMI) is a joint publication by Markit and the Nikkei media organisation and provides an estimate of manufacturing business activity for the preceding month. The report uses information obtained from a representative sector survey incorporating around 400 companies in eight broad categories. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic survey data such as the Markit PMIs, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

The HSBC India Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 500 manufacturing companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on industry contribution to Indian GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'.