India Manufacturing PMI Rebounds to 56.5 in January
India’s manufacturing sector activity rebounded strongly in January, with the HSBC Purchasing Managers’ Index (PMI) rising to 56.5 from an 18-month low of 54.9 in December. The expansion was driven by faster growth in new orders and production output.
Key Takeaways
- Manufacturing PMI rose to 56.5 in January from 54.9 in December.
- New export orders grew at the fastest pace since June 2022.
- Input costs increased, but firms absorbed costs, limiting output price inflation.
- Business optimism reached the second-highest level in over two years.
Strong Demand Drives Expansion
The seasonally adjusted index, where a reading above 50 indicates expansion, signalled a sharp improvement in sector health. Growth was broad-based across consumer, intermediate, and investment goods.
“India’s final manufacturing PMI showed that manufacturing activity accelerated in January, led by faster expansions in new orders and output,” said Pranjul Bhandari, chief India economist at HSBC.
“Manufacturers were able to secure new business from domestic as well as export markets, with broad-based demand across consumer, intermediate and investment goods,” she added.
Export Orders and Price Trends
New export orders rose at the fastest pace in over 18 months, since June 2022. However, input cost inflation accelerated in January.
“Input costs rose at a faster pace, but output price inflation was contained as firms absorbed additional cost burdens,” Bhandari said.
This suggests companies raised their selling prices at a slower rate to remain competitive.
Optimistic Business Outlook
Manufacturer sentiment improved from December, with optimism about the year-ahead production outlook reaching the second-highest level in more than two years.
“The overall level of positive sentiment seen in January was the second highest in over two years, with firms expecting buoyant demand, new client wins, advertising and new product releases to support output in the year ahead,” the survey said.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses from purchasing managers at around 400 manufacturers. The rebound indicates resilience in the Indian manufacturing sector despite global headwinds.
