India: Private sector PMI increases in January
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit rose from 54.9 in December to 55.8 in January. Consequently, the PMI ticked up further above the 50-threshold indicating an increase in business activity from the previous month.
The services PMI inched up to 52.8 in January from 52.3 in December on stronger demand conditions. New orders and output grew, but the pace of the expansion softened in December. That said, employment levels declined, while new export orders contracted sharply. Meanwhile, business sentiment among firms in January improved on the back of the vaccine rollout program. On the price front, input prices rose at a slower rate, while firms charged less for their services to spur demand.
On the manufacturing side, the PMI increased from 56.4 in December to 57.7 in January. The ongoing recovery in demand kept new orders and production expanding at a healthy pace. Moreover, employment levels continued to fall but at a softer pace than the previous month, which coupled with rising new orders led to a rise in backlogs of work in January. On the price front, input prices rose at the quickest pace in 28-months and likely tied to supply constraints.
Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:
“When we combine the results for the service sector with those for manufacturing, the picture for the Indian economy looks brighter. Across the private sector, output and new orders rose markedly and at rates that surpassed their respective long-run averages.”