India's manufacturing sector picked up growth momentum in the month of January, aided by positive demand trends, fastest increases in new orders and production. International sales also expanded at a quicker pace, while companies scaled up input purchasing and became even more optimistic towards the year-ahead outlook for output. According to the report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) recovered from an 18-month low of 54.9 in December to 56.5 in January. The latest reading highlighted the strongest improvement in the health of the sector since last September.
The survey noted that new orders placed with Indian goods producers rose at a sharp pace in January, and one that was the strongest in four months. Growth was reportedly boosted by marketing efforts and demand buoyancy. Further, the upturn in total sales was supported by a further increase in new export orders. Goods producers reported stronger demand from clients spread across Africa, Asia, Australia, Europe, the Middle East and the Americas. Collectively, the rate of expansion in international orders was the fastest since last October. Positive sales developments encouraged companies to scale up production volumes.
On the price front, input costs rose at the quickest rate in three months, albeit one that was moderate and among the weakest seen in three-and-a-half years. Rising input prices and demand strength, alongside greater transportation and wage costs, led manufacturers to increase their own fees in January. The average rate of charge inflation quickened to a three-month high and matched its long-run average. Besides, goods producers collectively recorded the fastest increase in outstanding business volumes in 15 months, with demand strength reportedly exerting pressure on their capacities. The rate of accumulation was moderate overall.
