Manufacturing PMI climbs to a six-month high in January

India’s manufacturing activity expanded in January from one-year low levels in December, with international sales recording the steepest upturn since February 2011, a private survey showed.

At 57.7 in January, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index also indicated expansion in new orders in the domestic market at the quickest pace since last July.

The headline figure had slipped to 56.4 in December, indicating a weaker improvement in operating conditions and subdued increases in output, new orders, and stock purchases.

A reading above 50 indicates an overall increase compared to the previous month, and below 50 denotes a decline.

January data showed a pick-up amid record job creation. Cost pressures retreated to their weakest in 11 months, but selling prices rose solidly amid buoyant demand, strengthening business confidence.

“India’s final manufacturing PMI marked a six-month high in January. Domestic and export demand were strong, supporting growth in new orders,” Pranjul Bhandari, chief India economist at HSBC, said.

The employment PMI suggested robust job creation in the manufacturing industry, as the index increased to its highest level since the series was created, Bhandari said, adding that input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices.

New orders expanded at the fastest rate in six months as international demand for Indian goods strengthened in January, with panelists noting gains from across the globe.

Buoyed by new export orders, the best seen in about 14 years, manufacturers in India scaled up production volume at the fastest rate since October 2024.

The rate at which manufacturers purchased inputs was the strongest in three months and sharp by historical standards.

With domestic and international sales increasing, 32% of firms estimated growth, with just 1% predicting reduction.

Buoyant underlying demand, better customer relations, favorable economic conditions, and marketing efforts all bode well for growth prospects, the survey showed.

Driven by sales gains and favorable forecasts, companies launched recruitment drives at the start of the fourth fiscal quarter. The extent to which employment expanded was the greatest in nearly 20 years of data collection for the private survey.

The rise in domestic and international demand resulted in the most pronounced stock in nearly three years, the survey showed.

Input costs expanded in January amid reports of greater freight, labor, and materials outlays. The survey, however, showed an overall modest rate of inflation—the weakest since February 2024.

The prices charged for Indian goods rose slowly in four months during January, albeit one marked and above the long-run series average. Survey participants said hikes to selling prices were supported by positive client appetite.