India: Private sector activity surges to a seven-year-high in January
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit jumped to 56.3 in January, up from 53.7 in December and representing the highest reading in seven years. A reading above 50 indicates a rise in business activity since the previous month.
The services PMI climbed to 55.5 in January from 53.3 in December, driven by sharper increases in output and new business, the latter of which mainly stemmed from new domestic orders, as export orders fell for the first time in 11 months due to weaker demand from China, Europe and the United States. To cope with higher workloads, service businesses increased headcounts in January, although the rate of increase was little-changed from December. Despite this, however, outstanding business rose in January, while cost inflation accelerated to a nearly seven-year high. Sale price inflation, meanwhile, quickened to the fastest pace in 23 months. Regarding the outlook, service businesses remained optimistic in January.
On the manufacturing side, the PMI surged to an eight-year peak of 55.3 in January, up from 52.7 in December, underpinned by a sharp increase in output, which was partly due to a slate of new orders from abroad, particularly Asia, Europe and North America. As they kept up with demand, manufacturers’ inventories tumbled in January, although their holdings of raw materials and semi-finished items increased as they sharply raised purchasing activity. Firms also hired new staff in January at the fastest pace in seven-and-a-half years. On the price front, both input and output price inflation tapered in January. Looking ahead, manufacturers became more upbeat about future output.