India's Manufacturing PMI Hits Two-Year Low in December, Signalling Economic Slowdown
India's manufacturing PMI drops to a two-year low in December, indicating a slowdown.
Photo by NIloy Tanvirul
India's manufacturing Purchasing Managers' Index (PMI) fell to a two-year low in December, signaling a significant slowdown in the sector. The PMI, a crucial indicator of economic health, dropped due to weaker demand, reduced factory orders, and a decline in output.
This unexpected dip suggests a challenging period for manufacturers, potentially impacting job creation and overall economic growth. The data highlights the need for policy interventions to stimulate demand and support industrial activity, especially as India aims for sustained high growth.
मुख्य तथ्य
Manufacturing PMI at 2-year low in December
UPSC परीक्षा के दृष्टिकोण
Understanding the components and interpretation of PMI.
Relationship between PMI and other economic indicators (GDP, IIP, WPI, CPI).
Impact of manufacturing slowdown on employment and economic growth targets.
Role of monetary and fiscal policies in addressing economic slowdowns.
Government initiatives to boost manufacturing (e.g., Make in India, PLI schemes) and their effectiveness.
Challenges faced by the manufacturing sector in India (demand, supply chain, infrastructure, ease of doing business).
दृश्य सामग्री
India's Manufacturing Sector: Key Indicators (December 2025)
A snapshot of critical manufacturing sector indicators for December 2025, reflecting the current economic slowdown and its underlying causes.
- Manufacturing PMI
- 48.5-1.5 points (from Nov 2025)
- New Orders Sub-index
- 47.0Declined
- Output Sub-index
- 47.5Declined
- Employment Sub-index
- 49.0Declined
Fell below the critical 50-point threshold, indicating contraction. This is a two-year low, signaling a significant slowdown in the sector.
Reflects weaker demand from both domestic and international markets, a primary driver for the overall PMI drop. Crucial for future output.
Indicates reduced factory production in response to lower demand and new orders. Directly impacts industrial output figures.
A reading below 50 suggests job shedding in the manufacturing sector, posing a challenge for job creation targets.
और जानकारी
पृष्ठभूमि
The Purchasing Managers' Index (PMI) is a key economic indicator providing insights into the manufacturing and services sectors. It is derived from monthly surveys of private sector companies and reflects business conditions.
Historically, PMI has been a reliable leading indicator of economic activity, often signaling shifts in GDP growth, employment, and investment trends. Its movement is closely watched by economists, policymakers, and investors to gauge the health and direction of the economy.
नवीनतम घटनाक्रम
बहुविकल्पीय प्रश्न (MCQ)
1. Consider the following statements regarding the Purchasing Managers' Index (PMI) in India: 1. PMI is a composite index based on five major indicators: new orders, output, employment, supplier delivery times, and stocks of purchases. 2. A PMI reading above 50 indicates expansion, while a reading below 50 indicates contraction of the sector compared to the previous month. 3. In India, the manufacturing PMI is compiled and released by the Ministry of Statistics and Programme Implementation (MoSPI). Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: B
Statement 1 is correct. PMI is indeed a composite index based on these five indicators. Statement 2 is correct. A reading above 50 signifies expansion, 50 indicates no change, and below 50 indicates contraction. Statement 3 is incorrect. In India, the PMI data is compiled and released by S&P Global (formerly IHS Markit), not by MoSPI. MoSPI is responsible for releasing official statistics like GDP and IIP.
2. In the context of India's manufacturing sector slowdown, as indicated by a falling PMI, which of the following policy responses would be most appropriate to stimulate demand and support industrial activity? 1. Increase the repo rate by the Reserve Bank of India (RBI) to control inflation. 2. Implement new Production Linked Incentive (PLI) schemes for sunrise sectors. 3. Enhance government capital expenditure on infrastructure projects. 4. Reduce corporate tax rates for manufacturing companies. Select the correct answer using the code given below:
उत्तर देखें
सही उत्तर: B
Statement 1 is incorrect. An increase in the repo rate (monetary tightening) is typically done to curb inflation by reducing money supply and demand. In a slowdown scenario with weakening demand, the RBI would likely consider reducing rates (monetary easing) or maintaining status quo to stimulate demand. Statement 2 is correct. PLI schemes incentivize domestic manufacturing and exports, thereby supporting industrial activity, especially in strategic sectors. Statement 3 is correct. Increased government capital expenditure on infrastructure creates demand for manufactured goods (cement, steel, machinery) and improves logistics, boosting the manufacturing sector. Statement 4 is correct. Reducing corporate tax rates can leave more disposable income with companies, encouraging investment and expansion, thereby stimulating industrial activity. Therefore, 2, 3, and 4 are appropriate responses.
3. Which of the following statements correctly differentiates the Purchasing Managers' Index (PMI) from the Index of Industrial Production (IIP) in India? 1. PMI is a survey-based indicator reflecting business sentiment, whereas IIP is based on actual production data. 2. PMI covers only the manufacturing sector, while IIP covers manufacturing, mining, and electricity sectors. 3. PMI is generally considered a leading indicator, whereas IIP is a coincident or lagging indicator of economic activity. Select the correct answer using the code given below:
उत्तर देखें
सही उत्तर: D
Statement 1 is correct. PMI is derived from surveys of purchasing managers about their business conditions and expectations, making it sentiment-based. IIP, on the other hand, measures the actual physical volume of production in various industrial sectors. Statement 2 is correct. While there is a manufacturing PMI, there is also a services PMI. However, the question refers to the manufacturing PMI specifically in the context of the news. IIP explicitly covers manufacturing, mining, and electricity. Statement 3 is correct. PMI, being based on forward-looking sentiment (new orders, future output expectations), often signals changes in economic activity before they are reflected in hard data like IIP or GDP, making it a leading indicator. IIP reflects current or past production, making it a coincident or lagging indicator.