India's Private Sector Ends 2024 on a Strong Note with Robust Growth

India's private sector showed remarkable growth in December 2024, with the HSBC Flash India Composite Output Index rising to 60.7, up from 58.6 in November. This marks the strongest expansion since August 2024, according to HSBC data compiled by S&P Global.

The surge was driven by robust growth in both manufacturing and services, fueled by strong inflows of new business and significant job creation. The manufacturing sector saw an increase in the HSBC Flash India Manufacturing PMI, which climbed to 57.4 in December from 56.5 in November. This growth was propelled by a rise in production, new orders, and employment, backed by robust domestic demand. Manufacturers also ramped up their input purchases to meet the growing demand, leading to a build-up of pre-production inventories, although finished goods stocks fell as firms worked through higher orders.

In the services sector, the HSBC Flash India Services PMI surged to 60.8 in December, up from 58.4 in November. This increase reflects sharp growth in sales and a rise in backlogs, with service providers benefitting from strong domestic and international demand, highlighting the sector's resilience.

December also witnessed a historic expansion in workforce numbers. Private sector companies added both permanent and temporary staff at the fastest rate in the survey’s history. The rise in backlogs of work, which reached the sharpest increase since May 2024, underscores the mounting workload for businesses across sectors.

Demand for Indian goods and services reached its highest level since July, driven by sharp increases in both domestic and international orders. The demand for exports grew at the fastest rate in five months, with manufacturing leading the way in export performance.

Ines Lam, Economist at HSBC, stated, “The rise in the manufacturing PMI in December was largely supported by gains in production, new orders, and employment. The acceleration in domestic orders signals improved growth momentum. At the same time, input cost pressures continued, which led manufacturers to raise selling prices.”

The output price index reached its highest level since February 2013, although the pace of price increases slowed compared to November’s near 12-year peak. Despite persistent cost pressures from food, freight, and labour, business optimism increased for the second consecutive month, reaching its highest point since September 2023. Positive demand conditions and stronger customer relationships are driving confidence among manufacturers and service providers alike.

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