Updated January 24th, 2024 at 11:50 IST
Business activity grows at four-month high in January: Survey
The manufacturing PMI rose to 56.9 in January, up from 54.9 in the previous month.
India's business activity surged to a four-month high in January, driven by increased demand. HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 61.0 this month, its highest level since September, indicating a robust expansion in economic activity.
The positive trend reinforces India's position as the fastest-growing major economy, with a projected growth of 6.9 per cent in the current fiscal year, according to a Reuters poll.
Pranjul Bhandari, Chief India Economist at HSBC, highlighted that the accelerated growth in January was led by stronger manufacturing output and more robust business services activity. New orders, particularly international orders, increased at a faster pace, underlining the resilience of India's economic landscape.
The manufacturing PMI rose to 56.9 in January, up from 54.9 in the previous month, while the services industry also witnessed an accelerated growth rate, with its PMI hitting 61.2 from December's 59.0. This surge in activity was attributed to a substantial expansion in demand, with both factory new orders and new business in the services sector witnessing strong growth.
The positive momentum has also translated into increased optimism among firms, especially in the manufacturing sector, where expectations for future output reached their highest level in over nine years. The survey indicated that firms have been consistently hiring for the past 20 months, with the services industry leading in employment generation.
While overall output prices rose at a slower rate in January, the survey noted that input costs increased at the sharpest pace since August 2023. This suggests that price pressures may persist, aligning with India's retail inflation hitting a four-month high in December.
The Reserve Bank of India is anticipated to keep interest rates unchanged until at least July, as suggested by a Reuters poll. Overall, the survey reflects a positive outlook for India's economic growth, driven by robust business activity and increasing demand.
(With Reuters inputs)
Published January 24th, 2024 at 11:50 IST