Manufacturing growth hits six-month high in January

In January, India’s manufacturing sector experienced significant growth, with the Purchasing Managers’ Index (PMI) rising to a six-month high of 57.7, a report by S&P Global revealed. This surge was primarily driven by a substantial increase in export-led output.

India’s manufacturing activity rebounded in January, reaching a six-month high, as the Purchasing Managers’ Index (PMI) rose to 57.7 from December’s 12-month low of 56.4, according to S&P Global. The expansion rate was the fastest since July and exceeded the long-run average of 54.1, indicating strong growth. The index is prepared based on the responses from purchasing managers of 400 companies. An index above 50 points to an expansion, while below 50 indicates a contraction. The PMI figure was released by HSBC and compiled by S&P Global.

“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.

New orders increased at the quickest pace since July, driven by the sharpest rise in export demand in nearly 14 years. This led to stronger output expansion, with total new business growing at a six-month high. International demand also strengthened, with gains reported from across the globe. Consequently, manufacturers scaled up production, with January seeing the most significant output growth since October 2024.

Robust sales and positive business sentiment encouraged firms to expand their workforce, marking the highest employment growth in nearly 20 years of data collection. Additionally, manufacturers accelerated input purchases at the fastest rate in three months. Timely supplier deliveries enabled firms to boost inventories, with vendor performance improving to its best level in eight months. Input stock accumulation was the highest since October 2024.

The survey noted, “According to panel members, buoyant underlying demand, better customer relations, favourable economic conditions and marketing efforts all bode well for growth prospects.”

However, the mismatch between demand growth and production led to a decline in finished goods inventories for the second consecutive month. The rate of stock depletion was the most pronounced in nearly three years.