“India’s final manufacturing PMI marked a six-month high in January. Domestic and export demand were both strong, supporting new orders growth. The employment PMI suggested robust job creation in the manufacturing industry, as the index increased to its highest level since the series was created. Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices.” Pranjul Bhandari, Chief India Economist at HSBC
Following a moderation in growth during December, Indian goods producers kicked off 2025 on a robust note. With new orders rising at the quickest pace since last July, fuelled by the steepest upturn in exports in nearly 14 years, there was a stronger expansion in output. January data also showed a pick-up in growth of buying levels and record job creation. Cost pressures retreated to their weakest in 11 months, but selling prices rose solidly amid buoyant demand. Meanwhile, business confidence strengthened.
Rising from December’s one-year low of 56.4 to 57.7 in January, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI®) signalled a robust improvement in the health of the sector. The rate of expansion was the quickest since last July and outpaced its long-run average.
Goods producers welcomed another substantial increase in new orders, which they attributed to better domestic demand and a pick-up in international sales. Total new business expanded at the fastest rate in six months. International demand for Indian goods strengthened in January, with panellists noting gains from across the globe. Notably, the rate of expansion in new export orders was the best seen in just under 14 years.
Subsequently, manufacturers in India continued to scale up production volumes. The latest increase was substantial and the fastest since October 2024. Companies turned more optimistic about output prospects, with nearly 32% of firms forecasting growth and just 1% expecting a reduction. According to panel members, buoyant underlying demand, better customer relations, favourable economic conditions and marketing efforts all bode well for growth prospects.
Robust sales gains and upbeat forecasts prompted companies to recruit additional workers at the start of the fourth fiscal quarter. The extent to which employment expanded was the greatest seen in nearly 20 years of data collection. Indian manufacturers also accelerated the rate at which inputs were purchased. January’s upturn was the strongest in three months and sharp by historical standards. Firms were successful in their efforts to lift inventories as suppliers were able to deliver materials in a timely manner. Vendor performance improved to the greatest extent in eight months, while the accumulation in input stocks was the fastest since October 2024.
Pranjul Bhandari, Chief India Economist at HSBC, said: “India’s final manufacturing PMI marked a six-month high in January. Domestic and export demand were both strong, supporting new orders growth. The employment PMI suggested robust job creation in the manufacturing industry, as the index increased to its highest level since the series was created. Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices.”
Finished goods inventories decreased for the second month running in January, as a mismatch in growth of demand over production compelled firms to dig into their warehouses. The rate of stock depletion was marked and the most pronounced in close to three years.
Input costs increased in January, amid reports of greater outlays on freight, labour and materials. The rate of inflation was modest overall and the weakest since February 2024, however.
Prices charged for Indian goods rose at the slowest pace in four months during January, albeit one that was marked and above the long-run series average. According to survey participants, hikes to selling prices were supported by positive client appetite.
Finally, capacity pressures among manufacturers in India remained mild, as indicated by only a fractional increase in outstanding business volumes. Underlying data showed that strong job creation in recent months enabled companies to stay on top of their workloads.
Sources: HSBC, S&P Global PMI, CSO via S&P Global Market Intelligence.
