India's factory activity in January hits 6-month high
What's the story
India's factory activity witnessed a major spike in January 2025, recording the fastest growth rate in six months.
The surge is mainly attributed to resilient demand and strong output, a private survey by S&P Global showed.
The HSBC final India Manufacturing Purchasing Managers' Index (PMI) climbed to 57.7 last month from December's 12-month low of 56.4, just below an early estimate of 58.0.
Growth indication
PMI indicates growth in India's manufacturing sector
Notably, the PMI has stayed above the 50-mark, signaling expansion instead of contraction, since July 2021.
This comes as a positive sign for Asia's third-largest economy which has been struggling with a slowdown in the past few quarters amid weak consumption.
"India's final manufacturing PMI marked a six-month high in January. Domestic and export demand were both strong, supporting new orders growth," said Pranjul Bhandari, chief India economist at HSBC.
Confidence booster
New orders and output boost confidence
New orders, a key indicator of overall demand, recorded their sharpest increase since July. This was mainly on the back of strong export orders which expanded at the fastest rate in nearly 14 years.
The sub-index measuring output also hit a three-month high.
This positive trend has boosted confidence for the coming 12 months and prompted firms to expand their workforces at the strongest pace since at least March 2005, when the survey began.
Inflation impact
Easing inflation pressure aids factory activity growth
The growth in factory activity was also aided by easing inflation pressure.
Input prices increased at the slowest rate in nearly a year, enabling firms to raise selling prices at a more moderate pace last month.
This development is particularly significant as headline inflation has consistently surpassed the Reserve Bank of India's medium-term target of 4% for most of the past year.