India's manufacturing sector recorded its strongest expansion in six months in January 2025, supported by rising domestic and export demand. The HSBC India Manufacturing PMI, compiled by S&P Global, increased to 57.7 from December’s 56.4, remaining well above the 50-mark that separates expansion from contraction. This resurgence in manufacturing activity has encouraged firms to expand their workforce at the fastest pace since the survey began in March 2005.
A significant driver of this growth has been a sharp rise in new orders, particularly for export orders, which showed their fastest expansion in nearly 14 years. This suggests that Indian manufacturers are benefiting from improving global trade conditions despite economic uncertainties. Additionally, the sub-index measuring production levels reached a three-month high, reinforcing the sector's strong performance.
Inflationary pressures, which have been a key concern for businesses, showed signs of easing. Input costs increased at the slowest pace in nearly a year, allowing companies to moderate their price hikes. This could provide relief to consumers and support overall economic stability. However, inflation has remained above the Reserve Bank of India's (RBI) medium-term target of 4% for most of the past year.
With manufacturing activity gaining strong momentum, market participants are closely monitoring the RBI’s upcoming monetary policy meeting scheduled for 5 feb to 7 feb. A majority of economists in a recent Reuters poll anticipate a 25-basis-point cut in the repo rate to 6.25%, which could further support economic growth.
The latest data is a positive signal for India's industrial sector, particularly amid concerns over slowing consumption in recent quarters. If the current growth trajectory continues, it could provide much-needed support to the broader economy and investor sentiment.
About RR Finance
An integrated financial services group, offering a wide range of financial products and services to corporations, institutions, high-net-worth individuals, and retail investors
Explore a wide range of investment opportunities with RR Finance
Disclaimer : The recommendations, suggestions, views, and opinions expressed by experts are their own and do not reflect the views of RR Finance. This news is for information purposes only, not investment advice.