India’s manufacturing sector saw a modest rise in January after hitting a two-year low in December, supported by higher new orders and production activity, according to a recent survey. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) increased to 55.4 in January from 55 in December. A reading above 50 indicates expansion, while below 50 points to contraction.
The survey highlighted that the sector’s recovery was pushed by stronger inflows of new business, higher production levels, and continued workforce expansion. “Indian manufacturing firms saw a rebound in January, driven by increased new orders, output, and employment. Input costs rose moderately, while the pace of growth in factory-gate prices eased, resulting in slight margin pressure for manufacturers,” said Pranjul Bhandari, chief India Economist at HSBC, according to a Reuters report.
Manufacturers cited robust domestic demand, growing new business, and investments in technology as the main contributors to production gains. Export orders also rose, though the pace was slower, with improved demand from regions including Asia, Australia, Canada, Europe, and the Middle East.
Employment Gains Remain Limited
Companies continued to hire, though job creation was modest. The survey described the pace of hiring as “slight,” marking the strongest increase in employment over the past three months. Despite this, optimism about future growth weakened significantly. Only 15 per cent of firms expected output to rise over the next year, while 83 per cent anticipated no change. “Despite faster growth in new orders, business confidence remains muted, and expectations for future output have declined to their lowest level since July 2022,” Bhandari noted in the report.
Price Trends Show Mixed Signals
Input costs rose at the fastest pace in four months, but inflation in selling prices slowed to a 22-month low. The survey stated, “Although output charges rose, the rate of inflation was modest and the weakest in nearly two years. Many firms suggested that improved efficiency, better cost management and market rivalry prevented them from increasing their fees.”
The HSBC India Manufacturing PMI is compiled by S&P Global using feedback from purchasing managers at roughly 400 manufacturing companies. The panel is structured across different industry segments and workforce sizes, reflecting their contribution to India’s GDP.
