“Indian manufacturing firms saw a rebound in January, driven by increased new orders, output, and employment,” said Pranjul Bhandari, India chief economist at HSBC.
Survey respondents cited buoyant demand, growth in new business and investments in technology as key factors supporting production. Output expanded sharply and at a faster pace than in December.
Looking ahead, however, the outlook weakened further, with just 15% of firms expecting output to increase over the coming year, while 83% anticipated no change.
“Despite faster growth in new orders, business confidence remains muted, and expectations for future output have declined to their lowest level since July 2022,” Bhandari said.
Consumer goods emerged as the “brightest area of India’s manufacturing industry”, while capital goods recorded the slowest improvement in operating conditions, according to the survey.New orders grew at a quicker pace, with panellists pointing to firm demand conditions and marketing efforts that boosted sales to both domestic and overseas clients. “The main impetus to overall sales came from the domestic market, however,” the survey said.
International orders increased, though at the weakest rate in 15 months. Firms reported higher demand from Asia, Australia, Canada, Europe and West Asia.
On the cost side, input prices rose at the fastest pace in four months, though the increase remained mild by historical standards. Some manufacturers reported higher costs for chemicals, copper, iron, jute, paper, steel and transportation.
“Underlying data showed that competitive pricing helped support sales,” the survey said.
Output prices edged higher, but inflation remained modest, weakest in around two years.
Many firms said improved efficiency, better cost management and intense competition limited their ability to raise prices.
“Input costs rose moderately, while the pace of growth in factory-gate prices eased, resulting in slight margin pressure for manufacturers,” Bhandari said.