Manufacturing PMI climbs to 55.4 in January on new orders, hiring

Rising outstanding business volumes drove goods producers to hire extra staff, and the pace of job creation rose to the quickest in three months, the survey stated

India’s private sector manufacturing growth slightly recovered to 55.4 in January after slipping to a two-year low in December as new orders, output, and hiring increased, according to data compiled by S&P Global on Monday.

 

HSBC’s India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, which measures monthly change in manufacturing output, was 55 in December.

 

The latest figure — a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases indices —was significantly lower than the Flash India Manufacturing PMI of 56.8, released last month.

 

The reading was above 50, which denotes expansion in activity, while below that signifies contraction. The headline figure has been in the expansion zone for the 51st month running.

 

 

The survey stated, Rising outstanding business volumes drove goods producers to hire extra staff. The pace of job creation rose to the quickest in three months.

 

“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,” Pranjul Bhandari, chief India economist at HSBC, said.

 

Granular data showed that consumer goods was one of the strongest sectors in the manufacturing industry, with the slowest improvement in operating conditions seen in capital goods, said the survey.

 

New orders and output both grew at a faster pace than the previous month. The survey noted that the major driver of demand was the domestic economy as new export business grew at the weakest pace in 15 months.

 

Input costs for businesses rose at the fastest pace in four months. Some firms reported paying more for chemicals, copper, iron, jute, paper, steel and transportation.

 

“January's results signalled another strong upturn in input purchases. Moreover, the rate of expansion quickened from December's two-year low. Underpinning the rise were greater production requirements and efforts to safeguard against shortages,” said the survey.

 

However, inflation in final prices of output grew at the slowest pace in nearly two years. Many firms suggested that improved efficiency, better cost management and market rivalry prevented them from increasing their fees, said the survey.

 

“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.