India’s factory growth improves slightly in January, PMI shows

BENGALURU: India’s manufacturing activity inched up in January as demand improved slightly but the gain wasn’t strong enough to lift business optimism or meaningfully increase hiring, according to a private survey released Monday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 55.4 in January from December’s two-year low of 55.0. However, it came in below the preliminary estimate of 56.8.

The PMI has stayed above the 50.0 threshold, which separates growth from contraction, since July 2021.

Factory output strengthened compared with December, when growth had slowed to a 38-month low.

New orders, a key measure of demand, also regained some of the momentum lost in the previous month.

Export demand, however, remained weak.

Export orders improved only marginally from December, suggesting the overall pickup was driven mainly by domestic demand.

Manufacturers reported receiving orders from clients across Asia, Australia, Canada, Europe, and the Middle East.

Despite the improvement in activity, job growth stayed subdued.

Hiring rose to a three-month high, but the pace of recruitment remained modest as firms adjusted staffing levels to meet higher operating needs.

At the same time, business confidence slipped to its lowest level in three-and-a-half years.

Only 15% of surveyed companies expected output to increase over the next year, while most anticipated no change. Price pressures painted a mixed picture.

Input costs increased moderately but at the fastest pace in four months with companies citing higher prices for chemicals, copper, iron, steel, and transportation.

Even so, output price inflation fell to its lowest level in nearly two years, suggesting manufacturers still have limited pricing power despite firmer demand.