What’s going on here?
India’s economy ended 2024 with a bang, as the private sector experienced its fastest output growth in months. December’s PMI, a crucial economic gauge, reached 60.7, spurred by solid gains in services and manufacturing.
What does this mean?
India’s private sector is in full swing, bolstered by easing inflation and robust demand. The latest PMI figures from HSBC and S&P Global echo August’s peaks, underscoring strong service and manufacturing sectors. This upward trend follows a modest 5.4% growth last quarter, suggesting brighter prospects ahead. The uptick in manufacturing PMI points to improved production and rising new orders, while services PMI hit 60.8, driven by both local and international demand. Business confidence is soaring, with employment reaching unprecedented levels since records began in 2005. This development also signals a slowdown in inflationary pressures, with consumer inflation lower than expected at 5.48%, which might lead the Reserve Bank of India to consider a rate cut in early 2025.
Why should I care?
For markets: Positive vibes ripple through the sectors.
India’s burgeoning private sector offers promising news for investors interested in emerging markets. With manufacturing and services both achieving record-level hiring, there’s a wave of optimism across major industries. This momentum hints at alluring investment opportunities in sectors set for continued growth, fueled by strong demand and improving economic conditions.
The bigger picture: A promising start for global economic shifts.
As India’s demand dynamics evolve and inflation eases, the nation positions itself as a pivotal player on the global economic stage. Should the Reserve Bank of India choose a rate cut, it may further propel growth, in line with global trends of stabilizing inflation and fostering economic expansion.
