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New Delhi: In a big relief, India's manufacturing sector activity recorded a marginal recovery in January, which indicates that industries are staying on track both at the level of domestic demand and production. The PMI witnessed an upward trend amid faster increase in new orders, even as business confidence slipped to its lowest level in three-and-a-half years, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) stated.
The India Manufacturing PMI rose from a two-year low of 55 in December to 55.4 in January. Notably, the figures for December were the lowest level in the last two years. In the PMI parlance, a PMI more than 50 indicates that the manufacturing sector is continuing to expand, while a level below 50 indicates contraction, and at 50, it means no change.
"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," PTI quoted Pranjul Bhandari, Chief India Economist at HSBC, as saying.
The participants of the Survey said that demand buoyancy, new business growth and tech investment supported production which led to the rise in January.
The main reason for the jump in overall sales came from the domestic market. However, new export business increased, but at a weaker pace. Firms which recorded increase cited greater demand from Canada, Europe, the Middle East, Asia, and Australia.
As far as employment is concerned, goods producers continued to hire extra staff. But the pace of job creation was 'slight', the quickest in three months, the report said.
HSBC India Manufacturing Purchasing Managers’ Index, the monthly survey mentioned that business confidence slipped to its lowest level in three-and-a-half years during January, as only 15 per cent of companies foresee output growth in the year ahead and 83 per cent forecast 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 added.
"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.
Meanwhile, the HSBC Flash India Composite Output Index appreciated to 59.5 in January as compared to 57.8 in December. This index gives details of the performance of both the manufacturing and service sectors. It is clear from the data that in January, both sectors registered growth at almost the same speed, which is a positive sign for the country's economic activities.
