Surged external demand and improved business sentiment in the country have taken India’s manufacturing PMI to nearly 8-year high. In the third month of expansion, the manufacturing PMI increased to 55.30 points in January from 52.70 in the previous month. Amid reports of early signs of economic recovery, the PMI has stamped the optimism. Companies noted the strongest upturn in new business intakes for over five years, which they attributed to better underlying demand and greater client requirements, said the IHS Markit report. The rise in total sales was supported by strengthening demand from external markets, as noted by the fastest increase in new export orders since November 2018, the report added.
New business, output, exports, input buying, and employment increased at a substantially faster rate in January. Amid a slow growth of consumption and demand in the country, the consumer goods sub-sector remained the brightest spot, although growth was sustained in intermediate goods and capital goods moved back into expansion.
“The PMI results show that a notable rebound in demand boosted the growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business,” said Pollyanna de Lima, Principal Economist, IHS Markit. To complete the good news, there was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead, Pollyanna de Lima added.
India’s longer-than-anticipated slowdown led to a massive downturn across industries but the unfinished business was broadly unchanged in January, ending a six-month sequence of accumulation. Even the outlook seems brighter now as the IHS report suggests that the Indian manufacturers were more upbeat about the year-ahead outlook for production and optimism stemmed from forecasts of better demand, new client wins, marketing efforts, capacity expansion, and new product releases.