India’s manufacturing sector, which saw a slowdown in December, rebounded to a six-month high in January, driven by an increase in new export orders, according to a private survey released on Monday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 57.7 in January from 56.4 in December and 56.5 in November. It stood at 57.5 in October and 56.5 in September. A PMI reading above 50 signals expansion, while a reading below 50 indicates contraction.
The January PMI figure was derived from the responses of 400 manufacturers. "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," the survey said. "January data also showed a pick-up in growth of buying levels and record job creation," it added.
India experienced sluggish growth in Q2FY25, with manufacturing expansion declining to 2.2% from 14.3% in the same quarter last year and 7% in the June quarter. Overall, GDP growth slowed to 5.4% in the September quarter, compared to 6.7% in the first quarter and 8.2% in the corresponding period last year. The GDP data for Q3 and FY25 is expected by the end of the month.
"India’s final manufacturing PMI marked a six-month high in January. Domestic and export demand were both strong, supporting new order 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," said Pranjul Bhandari, chief India economist at HSBC.
"Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices," she added.
Infrastructure output growth decelerated in December
India's infrastructure output, which contributes approximately 40% to industrial production, decelerated in December compared to the previous month. This slowdown was driven by a decline in production across four of the eight core sectors—coal, natural gas, refinery products, and fertilizers—according to data released last week by the commerce ministry.
"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," the HSBC survey said. "Subsequently, manufacturers in India continued to scale up production volumes. The latest increase was substantial and the fastest since October 2024," it added.
The survey indicated that Indian companies have become more optimistic about their output prospects, with almost 32% expecting growth and just 1% foreseeing a decline. "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," it said.
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