India's manufacturing PMI rises to four-month high of 56.5 in January

On the back of fast growth in new orders and production, India's manufacturing Purchasing Managers' Index (PMI) rose to a four-month high in January, a report released on Thursday showed. 

According to HSBC Flash India PMI data, the manufacturing PMI rose to 56.5 in January. In December last year, it had fallen to an 18-month low of 54.9. The latest reading highlighted the strongest improvement in the health of the sector since last September.

It has been above 50 since June 2021. 

"Current output expanded on robust demand, with domestic orders growing at a faster pace than export orders. The input price index inched up, but manufacturers were able to pass on some of the cost pressures to consumers, as suggested by the small rise in the output price index," said Ines Lam, economist at HSBC. 

According to the report, new orders placed with Indian goods producers rose at a sharp pace in January and were the strongest in four months. "Growth was reportedly boosted by marketing efforts and demand buoyancy," it said. 

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Moreover, strong demand and with an optimistic year-ahead outlook prompted firms to scale up their buying of raw materials. The future output sub-index strengthened to a 13-month high.

However, there was hardly any change in employment levels from December as firms reported sufficient capacity for their current workloads. Despite input cost inflation ticking to a three-month high, the rate of increase was marginal.

Prices charged increased mildly as firms passed on some of the additional cost burdens to clients in response to greater rubber, steel, packing materials, transportation and wage costs.

Inflation in India was near the upper limit of the Reserve Bank of India's (RBI) target range of 2-6 per cent in November and December. 

(With agency inputs)