India’s Economy Ends 2024 on Strong Footing; Business Growth at 4-Month High

Buoyed by steady demand in services and manufacturing and upbeat job growth, India’s output from the private sector grew at the fastest rate in the last four months.

HSBC's December flash India Composite Purchasing Managers' Index (PMI) grew to 60.7 as compared to 58.6 in November. Anything below 50 indicates contraction, while the business activity index has touched above 60 on 3 occasions this year. Such patterns have not been witnessed since 2008 indicating a strong private sector expansion.

Ines Lam, economist at HSBC said, “The small rise in the headline manufacturing PMI in December was mainly driven by gains in current production, new orders and employment.”

She added, “The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum in the economy.”

The services sector grew to a four-month high of 60.8 from 58.4 in November, while the manufacturing index ballooned to 57.4 from 56.6 last month.

Following two consecutive months of steep increases, inflationary pressures cooled in December. However, firms opted to increase the prices of products .

Notably, lower inflation print will prompt the Reserve Bank of India’s Monetary Policy Committee to reduce the repo rate.