Manufacturing PMI rises to 6-month high on upturn in exports

Favourable demand boosted optimism among manufacturing companies. Nearly 32% of the companies that participated in the survey expect output to increase in the coming months while just 1% expect reduction.

New Delhi: India’s manufacturing sector growth rose to a six-month high in January led by a steep upturn in exports and revival in domestic demand, as per an industry survey report released by S&P Global on Monday.

Purchasing Managers’ Index (PMI) for manufacturing rose to 57.7 in January from December’s one-year low of 56.4. January PMI level was the highest since July 2024.

The rate of expansion in new export orders during January was the best in 14 years. Manufacturing activities were also supported by revival in domestic demands. “Domestic and export demand were both strong, supporting new orders growth,” said Pranjul Bhandari, Chief India Economist at HSBC.

Favourable demand boosted optimism among manufacturing companies. Nearly 32 per cent of the companies that participated in the survey expect output to increase in the coming months while just 1 per cent expect reduction.

According to the firms surveyed, buoyant underlying demand, better customer relations, favourable economic conditions and marketing efforts all bode well for growth prospects, S&P Global noted in the report.

The monthly PMI report is based on a survey conducted among around 400 manufacturers spread across the country. A PMI print above 50 indicates growth in the sector while below 50 shows contraction.

Cost pressures retreated to their weakest in 11 months, but selling prices rose solidly amid buoyant demand. Input costs increased in January, amid reports of greater outlays on freight, labour and materials. However, the rate of inflation was modest overall and the weakest since February 2024.

“Input cost inflation eased for a second month, relieving pressure on manufacturers to raise final output prices,” said Bhandari.

Robust sales gains and upbeat forecasts prompted companies to recruit additional workers at the start of the fourth quarter of 2024-25. “The employment PMI suggested robust job creation in the manufacturing industry, as the index increased to its highest level since the series was created,” Bhandari said.

Indian manufacturers also accelerated the rate at which inputs were purchased. January's upturn was the strongest in three months and sharp by historical standards.