India’s Manufacturing PMI Climbs to Six-Month High of 57.7 in January, Driven by Strong Export Orders

New Delhi, Feb 3, 2025: India’s manufacturing sector experienced a significant rebound in January 2025, as the Manufacturing Purchasing Managers’ Index (PMI) surged to 57.7, marking its highest level in nearly six months. This robust growth was driven primarily by a surge in export orders, signaling a strong start to the new year.

The PMI for January, compiled by S&P Global, reflected a notable recovery from December 2024 when the index had slipped to a one-year low of 56.4, signaling a slowdown in factory activities. The PMI is a key indicator of manufacturing health, where a score below 50 signifies contraction and above 50 indicates expansion. January’s reading of 57.7 points to a healthy expansion, and it is the fastest pace of growth in the manufacturing sector since last July, well above its long-term average.

The private survey revealed that the rise in manufacturing activity in January was supported by the sharpest increase in new orders since last July. This surge was primarily driven by the most significant spike in exports seen in nearly 14 years, which fueled stronger output expansion. The data also showed an uptick in the growth of purchasing levels and record job creation within the sector.

The manufacturing industry’s performance was bolstered by improving domestic and export demand. Pranjul Bhandari, Chief India Economist at HSBC, pointed out that both domestic and export markets contributed equally to the growth in new orders. He noted, “India’s final manufacturing PMI reached a six-month high in January. Domestic and export demand were both strong, supporting new orders growth. The employment PMI indicated robust job creation in the sector, with the index rising to its highest level since the series began.”

Furthermore, the data revealed that cost pressures for manufacturers eased to their lowest levels in 11 months during January. This retreat in input cost inflation alleviated some of the pressures on manufacturers, allowing them to maintain competitive pricing without the need for excessive price hikes on their final goods. However, despite the easing of cost pressures, selling prices continued to rise solidly, driven by the buoyant demand for goods.

The improvement in the manufacturing sector also resulted in a boost to business confidence, as manufacturers appeared more optimistic about the future. The solid growth in both production and job creation indicates that India’s manufacturing sector is poised to remain a key driver of economic growth in the coming months.

The HSBC India Manufacturing PMI, compiled by S&P Global from responses to questionnaires sent to purchasing managers across a panel of around 400 manufacturers, is a closely followed indicator of economic health. It provides vital insights for economists, policymakers, and market participants, reflecting the pulse of the manufacturing industry and offering a glimpse into the broader economic landscape.

In conclusion, January 2025 marked a promising start for India’s manufacturing sector, with strong demand from both domestic and international markets, easing cost pressures, and positive job growth. This surge in activity signals a resilient outlook for India’s manufacturing industry as it continues to recover and expand, contributing significantly to the overall economic growth of the country.

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