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India manufacturing revival

New orders in India expanded at the fastest rate for ten months

Operating conditions for India’s manufacturers improved further in January, according to the HSBC India Manufacturing Purchasing Managers’ Index™ (PMI™). The index, fuelled by higher output and strong orders, rose to 51.4, from 50.7 in December ­­– the highest reading since March 2013. However, the pace of expansion was below the series average of 55.1.

Manufacturing activity moved into a higher gear led by faster growth in new orders

Leif Eskesen,
Chief Economist for India and ASEAN, HSBC

New orders expanded at the fastest rate for ten months, helped by an improvement in new export business. Output rose for the third consecutive month, with respondents citing new contracts as the main reason for increased production levels.

Leif Eskesen, Chief Economist for India and ASEAN, HSBC, said: “Manufacturing activity moved into a higher gear led by faster growth in new orders. However, inflation pressures also firmed, suggesting that the Reserve Bank of India has to keep up its inflation guards.”

Graphic shows HSBC India Manufacturing PMI since 2005

The survey suggests that consumer and intermediate goods were behind the recent expansion, but that capital goods production softened. Backlogs of work continued to rise but at a slightly slower rate, probably helped by stronger employment growth.

Purchasing activity picked up at the start of 2014, in line with the rise in order flows. Average input costs increased, with manufacturers reporting that higher prices for raw materials were passed on to customers.

The HSBC India Manufacturing PMI™ is a composite indicator designed to provide an overall view of activity in the manufacturing sector. A reading above 50 signals improvement, while below 50 signals deterioration.

The intellectual property rights to the HSBC India Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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