The HSBC PMI (Purchasing Managers’ Index) for India’s manufacturing sector reached a four-month high at 56.5 in January, as revealed in data released on February 1. Although slightly lower than the flash PMI of 56.9 released on January 24, the index remains above the key level of 50 for the 31st consecutive month, indicating expansion in activity.
Economist Ines Lam from HSBC noted that the final manufacturing PMI demonstrated an acceleration in manufacturing activity in January. Current output expanded due to robust demand, with domestic orders growing at a faster pace than export orders. The input price index saw a slight increase, but manufacturers were able to pass on some cost pressures to consumers, reflected in the small rise in the output price index.
S&P Global, which compiles the index, reported that new orders for Indian manufacturers saw the most significant increase in four months in January, with export orders rising the most since October. Input cost inflation reached a three-month high but remained moderate, described as “among the weakest seen in three-and-a-half years.” Consequently, prices charged to customers also increased to a three-month high in January, aligning with its long-run average.
While the surge in orders strained manufacturers’ capacities, most surveyed firms did not add jobs in January. Finished goods stocks continued to decline, suggesting that orders were largely met from existing inventories.
Overall, with new product enquiries, diversification, and strengthening demand, business confidence rose in January. S&P Global reported that panellists expressed optimism about the year-ahead outlook for output, marking the most positive sentiment in 13 months.
