India’s manufacturing sector showed signs of recovery in January, according to HSBC data. The Manufacturing Purchasing Managers’ Index (PMI) rose to 55.4, up from 55.0 in December, marking a rebound after a two-year low.
The growth was mainly driven by strong domestic demand, higher production, and increased hiring. Factories received more orders from local customers, and companies worked harder on marketing to boost sales.
Exports also grew, but the pace was slow, at a 15-month low. Countries like Asia, Australia, Canada, Europe, and the Middle East contributed to the overseas demand.
Among different sectors, consumer goods performed the best, while capital goods saw the slowest improvement. Factory output rose sharply in January, supported by steady demand, new business, and investments in technology.
Employment picked up slightly, marking the fastest growth in jobs over the past three months. Companies continued to hire workers, but overall job creation remained modest.
Despite these positive signs, business confidence weakened. HSBC’s Chief India Economist, Pranjul Bhandari, said that even with higher orders and production, manufacturers expect slower output in the future, with confidence at its lowest since July 2022.
Input costs rose moderately, while factory-gate price growth eased, putting slight pressure on profit margins. Although the January PMI was below the earlier flash estimate of 56.8, it stayed above the long-term average, showing that the sector is still expanding.
In short, Indian manufacturing is recovering, led by domestic demand and higher output, but companies remain cautious about the future, reflecting muted confidence in the sector.
