Following a moderation in growth during December, India’s manufacturing activity showed signs of recovery entering the new year, at a six-month high with the Purchasing Managers’ Index (PMI) for the month of January at 57.7, data released by S&P Global on Monday showed. The rate of expansion was the quickest since last July and outpaced its long-run average. The figure had plunged to a 12-month low of 56.4 in December, down from 56.5 in November, even as it remained above its long-run average of 54.1 thereby signalling a robust rate of growth.
Per the survey, with new orders rising at the quickest pace since last July, fuelled by the steepest upturn in exports in nearly 14 years, there was a stronger expansion in output. January data also showed a pick-up in growth of buying levels and record job creation, it said. “Cost pressures retreated to their weakest in 11 months, but selling prices rose solidly amid buoyant demand. Meanwhile, business confidence strengthened,” the release by S&P Global said.
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s final manufacturing PMI marked a six month high in January. Domestic and export demand were both strong, supporting new orders growth. The employment PMI suggested robust job creation in the manufacturing industry, as the index increased to its highest level since the series was created. Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices.”
Due to better domestic demand and a pick-up in international sales, goods producers witnessed a substantial increase in new orders. Total new business expanded at the fastest rate in six months. Further, international demand for Indian goods strengthened in January, with panellists noting gains from across the globe. The expansion rate in new export orders was the best seen in just under 14 years, the survey stated. Subsequently, manufacturers in India continued to scale up production volumes. The latest increase was substantial and the fastest since October 2024.
Per S&P Global, robust sales gains and upbeat forecasts prompted companies to recruit additional workers at the start of the fourth fiscal quarter. The employment expansion was the greatest seen in nearly 20 years of data collection.
Manufacturers also accelerated the rate at which inputs were purchased with January upturn strongest in three months. With timely deliveries by suppliers, firms were successful in their efforts to lift inventories. Vendor performance improved to the greatest extent in eight months, while the accumulation in input stocks was the fastest since October 2024, the survey stated.
With a mismatch in growth of demand over production, finished goods inventories decreased for the second month running in January. The rate of stock depletion was marked and the most pronounced in close to three years.