Manufacturing PMI climbs to four-month high in January

Manufacturing activity in India rose to a four-month high in January on a sharp increase in new orders.

The HSBC Indian Manufacturing Purchasing Managers’ Index (PMI) rose to 56.5 in January from an 18-month low of 54.9 in December.

“Current output expanded on robust demand, with domestic orders growing at a faster pace than export orders,” Ines Lam, economist at HSBC, said.

“The input price index inched up, but manufacturers were able to pass on some cost pressures to consumers, as suggested by a small rise in the output price index,” Lam added.

New orders at Indian goods producers rose sharply in January at the strongest pace in four months, with marketing efforts and demand buoyancy boosting growth.

On pricing, input cost inflation hit a three-month high, albeit staying moderate and among the weakest in three-and-a-half years.

A combination of higher input costs, robust demand, and increasing transportation and labor expenses prompted manufacturers to raise their prices.

The data indicated an increase in overall sales, bolstered by a rise in new orders for exports.

Demand for goods from customers across Africa, Asia, Australia, Europe, the Middle East, and the Americas surged, driving international order growth to its peak since last October.

The surge in demand led to the fastest growth in unfinished work in 15 months, straining production capacities, though the accumulation rate remained moderate.

Despite this, most survey respondents chose not to hire more workers.

The beginning of the last fiscal quarter saw sustained growth in purchases of rawmaterials, fueled by a strong demand for goods and higher production needs, with purchase volumes rising sharply to a peak not seen in four months.

Suppliers met the heightened input demand without delay, allowing producers to significantly increase their pre-production stock levels, marking one of the strongest accumulation rates in nearly 19 years of the survey’s history.

However, stocks of finished goods decreased in January, as firms reported fulfilling orders from existing inventories, with the rate of stock reduction slowing to its least in six months.

Business confidence received a boost from new product inquiries, diversification efforts, sustained demand, and increased publicity, leading to the most positive output outlook in 13 months.

S&P Global compiles the HSBC India Manufacturing PMI® using data from questionnaires distributed to purchasing managers across a panel of about 400 manufacturing companies.

This panel is organized by specific industry sectors and the size of the company’s workforce, reflecting their contribution to the gross domestic product.