India's manufacturing PMI rises to a four-month high of 56.5 in January
- IBEF
- February 2, 2024
India's manufacturing Purchasing Managers' Index (PMI) in January demonstrated a noteworthy rebound, surging to 56.5 according to the HSBC Flash India PMI data. This marked a significant recovery from the preceding month, December 2023, when the index had dipped to an 18-month low of 54.9. The latest reading not only underscores the resilience of the manufacturing sector but also represents the most robust improvement since September 2023, consistently holding above the crucial 50-point mark since June 2021. The expansion was primarily fueled by robust domestic demand, outpacing export growth. Notably, new orders experienced a sharp increase, attributed to effective marketing strategies and heightened demand buoyancy. Despite a marginal uptick in input prices, manufacturers successfully transmitted some cost pressures to consumers, evidenced by a moderate rise in the output price index.
Moreover, the report highlights that strong demand and an optimistic outlook for the year ahead prompted manufacturing firms to intensify their procurement of raw materials, leading to a 13-month high in the future output sub-index. However, despite this buoyancy, there was only a marginal change in employment levels from December, as firms reported having sufficient capacity for their existing workloads. Notably, despite a slight uptick in input cost inflation, the rate of increase remained modest. Meanwhile, prices charged by manufacturers increased mildly, reflecting their ability to pass on additional cost burdens to clients, particularly in response to rising costs in areas such as rubber, steel, packing materials, transportation, and wages. This aligns with the broader economic context, as inflation in India approached the upper limit of the Reserve Bank of India's target range of 2-6% in November and December.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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