India’s Composite Output Index Hits Strongest Expansion Since August 2024

According to HSBC data compiled by S&P Global, the HSBC Flash India Composite Output Index, which measures combined output in manufacturing and services, increased to 60.7 in December from 58.6 in November, indicating the strongesIndia’s Composite Output Index Hits Strongest Expansion Since August 2024t expansion since August 2024.
India’s private sector witnessed robust growth in December, marking its highest performance in four months. Both the manufacturing and services sectors showed accelerated growth, supported by increased new business inflows and heightened job creation.
The HSBC Flash India Manufacturing PMI improved to 57.4 in December, up from November’s 56.5, indicating stronger business conditions. Gains in production, new orders, and employment drove the recovery, supported by a rise in domestic demand.
The services sector continued to lead the growth momentum, as reflected in the HSBC Flash India Services PMI Business Activity Index, which climbed to 60.8 in December from 58.4 in November. Service providers recorded a sharper rise in sales and backlogs, highlighting the sector’s resilience.
Private sector firms expanded their workforce significantly in December, with job creation reaching a new survey peak.
Employers added both permanent and temporary staff to meet the growing demand, while backlogs of work increased at the fastest pace since May 2024.
Ines Lam, Economist at HSBC, said, “In this flash release, the small rise in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders and employment. The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum in the economy. In addition, sustained increases in input costs have pushed manufacturers to continue to raise selling prices. The output price index rose to its highest level since February 2013.”
Demand for Indian goods and services saw its sharpest increase since July, with both domestic and international orders contributing to the growth.
New export orders expanded at the quickest rate in five months, with manufacturing outperforming the services sector in export growth.
Business optimism strengthened for the second consecutive month, reaching its highest level since September 2023. Positive demand expectations and stronger customer relations boosted confidence among both manufacturers and service providers.
Cost pressures eased slightly from September’s 15-month high, aligning with long-term averages. However, input costs for items like food, freight, and labour continued to rise.
Despite the easing of cost pressures, firms increased selling prices, though at a slower rate than November’s near 12-year high.
Manufacturers ramped up input purchases in December, benefiting from improved vendor performance. Pre-production inventories grew, but finished goods stocks contracted as companies utilized inventory to meet rising demand.