New Delhi: India’s manufacturing sector showed a small improvement in January, supported mainly by domestic demand, but business confidence fell sharply as export orders remained weak.
The HSBC India Manufacturing Purchasing Managers’ Index rose to 55.4 in January from 55.0 in December. A reading above 50 shows expansion, meaning factory activity continued to grow, though only slightly.
Survey data showed that new orders increased at a moderate pace, driven mostly by local customers. Export demand stayed soft, reflecting weak global conditions. Manufacturers said overseas sales did not improve much compared with previous months.
Employment in factories rose to a three month high as firms added some workers to meet higher output needs. However, the pace of hiring remained cautious.
Input costs increased again in January, mainly due to higher raw material prices. At the same time, selling price inflation eased, suggesting that companies found it difficult to pass higher costs on to customers.
The most worrying sign came from business sentiment. Confidence about future output dropped to one of the lowest levels seen in recent years. Many firms said uncertainty about global demand and rising costs made them careful about expansion plans.
Economists said the data shows that India’s manufacturing sector is still growing but lacks strong momentum. While domestic demand is helping factories stay active, weak exports and falling confidence could limit faster growth in the coming months.
The January figures also fit into a mixed picture across Asia, where some countries have seen stronger factory activity due to exports, while others, including India, continue to rely mainly on local demand to support growth.