Kamal Ghorui
India’s factory activity picked up marginally in January after slipping to a two-year low the previous month. The sector was helped by strong inflows of new orders, even as sentiment among manufacturers weakened sharply, a monthly survey showed on Monday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.4 in January from 55 in December. A PMI reading above 50 indicates expansion, while a level below that mark points to contraction. The survey showed that growth across the sector was supported by higher new business, increased production and continued hiring. “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,” said Pranjul Bhandari, chief India Economist at HSBC. Manufacturers cited demand buoyancy, gains in new business and investments in technology as key factors aiding production during the month. Domestic demand remained the dominant source of sales growth. Export orders also increased, though the pace of expansion was softer, with firms pointing to improved demand from Asia, Australia, Canada, Europe and the Middle East. On employment, companies continued to add workers, although job creation remained limited. The survey described the pace of hiring as “slight”, marking the strongest increase in employment seen in the past three months. However, confidence about future activity deteriorated further. Business optimism fell to its lowest level in three-and-a-half years, with only 15 per cent of respondents expecting output to rise over the next year, while 83 per cent projected no change. “Despite faster growth in new orders, business confidence remains muted, and expectations for future output have declined to their lowest level since July 2022,” Bhandari said. Price trends were mixed during the month. Input costs rose at the fastest rate in four months, while inflation in selling prices eased to a 22-month low. “Although output charges rose, the rate of inflation was modest and the weakest in nearly two years. Many firms suggested that improved efficiency, better cost management and market rivalry prevented them from increasing their fees,” the survey said. The HSBC India Manufacturing PMI is prepared by S&P Global using responses from purchasing managers at around 400 manufacturing companies. The survey panel is structured by industry segment and workforce size, in line with their contribution to India’s gross domestic product.
