Manufacturing Strength Supports Early 2026 Economic Optimism

India’s manufacturing sector closed 2025 on a positive note, with December Purchasing Managers’ Index (PMI) data indicating a moderate expansion in factory activity. The latest figures suggest steady growth in output, new orders, and employment, reinforcing optimism about the sector’s performance in early 2026.

According to industry indicators, manufacturing output continued to rise as demand conditions improved across domestic and export markets. Firms reported better order inflows, supported by easing input cost pressures and relatively stable supply chains. The improvement points to resilience despite global economic uncertainties and tighter financial conditions in some international markets.

The PMI reading remaining above the expansion threshold reflects sustained momentum in industrial activity, particularly in consumer goods, intermediate products, and select capital goods segments. Manufacturers also indicated cautious optimism about future output, citing improved business confidence and expectations of stable demand.

Economists note that the manufacturing sector’s steady performance is significant for India’s broader economic outlook, as it supports employment generation, export growth, and overall GDP momentum. While challenges such as global demand volatility and geopolitical risks remain, the December data suggests that India’s factories are entering 2026 on a relatively strong footing.

Overall, the PMI numbers reinforce expectations that manufacturing will continue to play a key role in driving India’s economic growth in the coming months.