India's manufacturing activity expanded in January as the Purchasing Managers' Index came in at 55.4 in January in comparison to 55 in the previous month.
In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.
According to HSBC Global Manufacturing PMI report, domestic demand was the key driver with consumer goods as the most promising area while operating conditions in capital goods witnessed its slowest improvement. International demands from Asia, Australia, Canada, Europe and the Middle East increased compared to the previous month but still remained at 15-month low. Charge inflation eased further.
Business confidence slipped to its lowest level in 3.5 years with an alarming majority of 83% of companies expecting no change in output growth in the year ahead.
"Expectations for future output have declined to their lowest level since July 2022," Pranjul Bhandari, Chief India Economist at HSBC, said.
"Indian manufacturing firms saw a rebound in January...Input costs rose moderately, while the pace of growth in factory-gate prices eased, resulting in slight margin pressure for manufacturers," he added.
Goods suppliers were able to meet the rising demand resulting in further expansion in input inventories. Meanwhile, finished goods stocks decreased for the third straight month.
