Team TrickyScribe: India’s private sector output surged at the fastest pace in four months, according to preliminary survey data, closing 2024 on a strong note. Bolstered by rising demand across services and manufacturing, the economy also recorded unprecedented job growth, signaling a robust recovery.
India’s economy enters 2025 with strong momentum, driven by resilient business activity, rising demand, and record job creation. As inflation eases, the outlook for Asia’s third-largest economy remains optimistic, positioning it for robust growth in the coming year.
Economic Growth Softens but Outlook Brightens
While Asia’s third-largest economy posted a softer 5.4% GDP growth in the last quarter, easing inflation has improved the outlook for private sector demand in 2025. Analysts anticipate this momentum to drive stronger growth next year.
HSBC PMI Hits 60.7, Matching August High
The December HSBC India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 60.7, recovering from 58.6 in November. This marks the index’s highest performance since August, with business activity exceeding the 60-mark for most of the year, a milestone last achieved before the 2008 global financial crisis.
Domestic and International Demand Drive Growth
Economist Ines Lam of HSBC highlighted gains in current production, new orders, and employment as key drivers of December’s manufacturing PMI, which rose to 57.4 from 56.5 in November. The services sector outpaced manufacturing with a PMI of 60.8, the highest since August, as domestic and international demand accelerated.
Job Creation Hits Record High
India’s private sector saw record employment growth, driven by improving business optimism for 2025. The survey reported the fastest hiring rates since it began in 2005, with both manufacturing and services reaching new peaks for employment generation.
Easing Inflation Provides Relief
Inflationary pressures eased in December, following two months of sharp rises. While firms raised selling prices, the increase was slower than November’s 12-year high. With consumer inflation at 5.48% in November, economists expect the Reserve Bank of India to consider a rate cut in February 2025, further bolstering economic confidence.
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