India’s manufacturing PMI moderates in January amid slower increase in total sales

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India’s manufacturing sector activity moderated in January amid a slower increase in total sales, and headcounts were broadly unchanged amid sufficient staff numbers to cope with current requirements, according to a monthly survey.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell from December’s recent high of 57.8 to 55.4 in January, as factory orders and production rose at sharp, albeit slower, rate.

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The January PMI data pointed to an improvement in overall operating conditions for the 19th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.

“Despite some loss of growth momentum, the sector looks set to at least remain in expansion mode as the final quarter of the current fiscal year draws to a close,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

The rate of expansion eased from December, but remained sharp and above its long-run average. Panellists suggested that marketing efforts bore fruit, with demand resilience and favourable economic conditions also supporting sales.

“Rising backlogs and the purchasing of additional inputs suggested that companies will continue to lift output in the coming months. Less challenging supply-chain conditions meant that firms were able to secure critical inputs and rebuild their inventories as intended,” Lima added.

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The latest results suggested that the domestic market was the main source of new business growth as international sales rose only slightly in January. Moreover, the rate of increase was below its long-run trend and the weakest in the current ten-month period of expansion.

“A key area of weakness seen in the latest PMI data was exports. Although manufacturers received new orders from international markets, the increase was slight at best and moderated considerably to a ten-month low,” Lima said.

On the inflation front, there was a quicker, albeit historically subdued, increase in input costs. Charge inflation softened in January, but remained above the long-run series trend.

“There was a mild resurgence in cost pressures, which manufacturers linked to higher prices for items like energy, metal and electronic components. The rate of cost inflation remained historically subdued, but companies nevertheless hiked their fees as demand resilience facilitated the passing on of additional cost burdens to clients,” Lima said.

On the employment front, companies sought to expand inventories, employment levels were left broadly unchanged as capacities were reportedly adequate for current requirements.

The S&P Global India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.