Manufacturing PMI in January recovered after losing momentum in December. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.4 in January from a two-year low of 55.0 in December. Despite recovery business confidence has weakened
The January recevory signals a strong improvement in overall business conditions as factory orders, production and hiring picked up pace.
January orders driven by local demand, exports grow at 15-month low pace
New orders during January was supported largely by strong domestic demand. Companies said better demand conditions and increased marketing efforts helped boost sales.
Export orders also grew, but at one of the weakest rates in the past 15 months.Firms that saw higher overseas demand pointed to markets in Asia, Australia, Canada, Europe and the Middle East.
According to HSBC PMI data, among segments, consumer goods emerged as the strongest performer, while capital goods recorded the slowest improvement in operating conditions.
Factory output accelerates in January on steady demand
Factory output also rose sharply in January, growing at a faster pace than in December. Survey participants linked the rise to steady demand, new business inflows and higher investment in technology.
While job creation remained modest, it was the fastest seen in the last three months and manufacturers continued to add workers.
Although the January reading was lower than the flash estimate of 56.8 released earlier, it stayed above the long-term average, indicating continued expansion in the sector.
Indian manufacturing rebounds in January, but confidence weakens: HSBC
Pranjul Bhandari, Chief India Economist at HSBC said that despite faster growth in new orders, business confidence remains muted and expectations for future output have declined to their lowest level since July 2022.
“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,” he said.