India’s factory activity eases while still outpacing peers in region

Manufacturing activity in India moderated in December, while still outperforming Asian peers as new orders and business confidence continued to grow.

The HSBC India manufacturing purchasing managers’ index came in at 54.9 last month, down from 56 in November, the bank said on Wednesday. The December reading was the weakest in 18 months, as the pace of factory orders and output lost momentum. Readings above 50 indicate expansion.

“India’s manufacturing sector continued to expand in December, although at a softer pace,” Pranjul Bhandari, chief India economist at HSBC Holdings Plc, said in a statement. “Growth of both output and new orders softened, but on the other hand, the future output index rose since November.”

Despite last month’s slowdown, the PMI was still above its long-term trend, HSBC said, with international orders rising for the 21st straight month in December. India’s manufacturing sector contin-ued to outpace the region, as sluggish economic activity weighed on factories in China and elsewhere.

Manufacturers in India benefited from an easing in input costs, which rose at their second-slowest pace in more than three years in December. Employment was also relatively stable in the month, HSBC said.

The strong growth for Indian manufacturers stands in contrast to the wider region, as economic activity in China and other developed markets has weighed on factory demand. Indian manufacturers, meanwhile, have continued to benefit from a relatively stronger economic backdrop.

In China, data published on Tuesday showed a mixed picture for manufacturers last month, with a private measure of manufacturing activity showing a small improvement while a broader official gauge fell to a six-month low.

Trade bellwether Taiwan showed a sharp deterioration in factory conditions with a PMI of 47.1 in December.

Manufacturing activity likewise shrank in Southeast Asia, with Thailand, Malaysia, Myanmar, and Vietnam showing contraction.