India Manufacturing Purchasing Managers’ Index (INPMI), climbed to 56.5, up from an 18-month low of 54.9 in December, according to HSBC India Manufacturing Purchasing Managers’ Index compiled by S&P Global. India’s manufacturing industry had significant progress at the start of 2024, achieving its quickest expansion in four months in January.
Although the final reading was slightly below the preliminary estimate of 56.9, it comfortably remained above the crucial 50-mark that distinguishes expansion from contraction. This positive trend has persisted since June 2021, highlighting the sector’s resilience and consistent growth.
Additionally, the report added that the survey’s new orders sub-index, boosted by both domestic and overseas demand, increased substantially to its highest level since September. This extends the continuing expansion sequence to more than two and a half years, highlighting the industrial sector’s continued strength.
Analysts expect that India will remain the world’s fastest-growing major economy in the coming year, thanks to significant government expenditure. However, the government tries to balance fiscal prudence, as demonstrated by its target to reduce the budget deficit as a proportion of GDP, according to the report.
In January, firms responded to strong demand and an optimistic year-ahead outlook by increasing their raw material purchases. The future output sub-index reached a 13-month high and purchasing activities accelerated at the fastest pace since September. Despite these positive developments, employment levels remained largely unchanged from December, with companies reporting sufficient capacity for their existing workloads.
While input cost inflation reached a three-month high, the rate of increase was marginal. Firms adjusted to the additional cost burden by mildly increasing prices charged to clients, covering areas such as rubber, steel, packing materials, transportation and wage costs.
Inflation in India hovered near the upper limit of the Reserve Bank of India’s (RBI) target range of two to six per cent in November and December. Despite this, the central bank is not expected to consider interest rate cuts until at least July, emphasising a cautious approach to monetary policy.
The January surge in manufacturing activity not only signals a positive start to the year but also reinforces the sector’s pivotal role in India’s economic trajectory. As the government balances growth initiatives with fiscal responsibility, the manufacturing sector remains a key driver of India’s economic prowess.
