Factory activity picks up, rises to 55.4 in January

PMI manufacturing in January

India’s manufacturing activity picked up to 55.4 in January from 55 in the previous month, the HSBC India Manufacturing Purchasing Managers' Index, released on February 2, shows.

The pickup in manufacturing follows a disappointing end to the previous year when the pace of expansion in December dipped to a two-year low.

A reading of over 50 signals expansion.

"Indian manufacturing firms saw a rebound in January, driven by increased new orders, output, and employment,” HSBC chief India economist Pranjul Bhandari said.

Input costs rose moderately, while the pace of growth in factory-gate prices eased, resulting in slight margin pressure for manufacturers.

“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 said.

Business confidence slipped to its lowest level in three-and-a-half years during January, as only 15 percent of companies foresee output growth in the year ahead and 83 percent forecast no change, the note said.

India’s economic activity, however, has been strong in the third quarter as well. Economic Survey had pointed to a growth of 7 percent, as per the finance ministry’s internal nowcast model.

Moneycontrol Eco Pulse, a monthly real-time indicator, had also come in at 53.7 hinting at a pick-up in performance in December from the previous month.

A value of over 50 indicates strong momentum compared with the previous month, while a below 50 value signals moderation.