India’s Manufacturing PMI Hits Two-Year Low, but Momentum Holds Up

India’s manufacturing sector ended 2025 on a softer note, with growth losing some steam but remaining firmly in expansion territory, according to the HSBC India Manufacturing PMI released on Friday.

The headline PMI slipped to 55.0 in December, down from 56.6 in November, marking the weakest improvement in sector health in two years. While the reading remains above its long-run average, it reflects a clear moderation in momentum across several indicators.

Manufacturers continued to report solid growth in new orders and output, supported by underlying demand. However, the pace of expansion slowed as competitive pressures intensified and sales of certain products softened.

Production growth eased to a 38-month low, while employment rose at the slowest pace in the current 22-month job-creation cycle. Purchasing activity also moderated, with input buying rising at its weakest rate in two years as firms adjusted to softer demand conditions.

Export momentum cooled further. New export orders expanded at the slowest rate in 14 months, with companies citing demand primarily from Asia, Europe and the Middle East. The narrower range of export destinations points to growing caution in global markets.

On the cost front, pressures remained muted. Input costs increased at a historically negligible pace, while output charge inflation eased to a nine-month low, offering some relief to manufacturers and supporting pricing competitiveness.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said that despite the slowdown, the sector remained resilient. Strong new business inflows are expected to keep factories busy into the final quarter of the fiscal year, while subdued inflation could continue to underpin demand.