Context:
Indian private sector manufacturing activity soared to a six-month high in January, ending a one-year low in December 2024. The record-breaking export performance and strong factory orders were attributed to the rise, as said by the HSBC India Manufacturing PMI.
Key Highlights
The PMI indicates recovery
- HSBC India Manufacturing PMI rose from 56.4 in December to 57.7 in January, breaking a two-month decline.
- This indicates strong expansion in manufacturing activity.
Exports Reach a 14-Year High
- Export growth was the highest since 2011, boosting overall manufacturing output.
Strong Factory Orders & Production
- Factory order books grew at the fastest rate since July 2024, which is a reflection of high demand.
- Production volumes grew at the fastest rate since October 2024.
Easing Cost Pressures & Price Trends
- Input cost pressures eased to an 11-month low, which eased the strain on manufacturers.
- Businesses increased prices, but at the slowest rate in four months.
Manufacturing Sector Sees Record Hiring
- Hiring increased at the fastest pace in nearly 20 years, S&P Global reported.
- Sales were strong, and business growth expectations were bright, leading to more workers hired.
Businesses Feel Hopeful About Future
- 32% of firms anticipate growth, while only 1% expect contraction in output.
- Companies are more optimistic about future expansion than they were in the previous months.
Implications & Outlook
- Improved Manufacturing Growth
- The PMI increase indicates a healthy rebound in India’s manufacturing sector.
- Boost to Job Creation
- Higher hiring is indicative of better employment trends in the sector.
- Inflation Taming
- Lower increases in prices and easier input prices might help to keep inflation within the control level.
- Growth Likely to Be Maintained in Q4 FY25
- Growth will be sustained, as orders, exports, and business confidence are growing.
