Bharat’s manufacturing sector recorded a strong growth in January this year led by a sharp rise in new export orders and a likely flurry of restocking activity around the world, according to the HSBC flash PMI report released on Friday.
Based on an analysis of 100 activity indicators, the report suggests that the growth momentum has improved in the quarter ending December with 65 per cent of the indicators growing at a positive clip in the December quarter compared to 55 per cent in the previous one.
However, the services PMI in January was a tad lower than last month, the statement said.
“The divergence between manufacturing and services could be driven by tariff fears. We find that new export orders rose sharply for manufacturers, in fact, more sharply than the rise in domestic orders or the rise in service orders. This, we think, can be attributed to rapid restocking around the world, before new likely tariffs kick in. And manufacturing output responded to these new orders by raising output rapidly,” the report states.
Trends in the cost pressures diverged as well. While the input prices eased to a ten-month low for manufacturers, prices rose for the service providers — the fastest since August 2023. Consequently, prices charged by the service providers rose. However, their margins continued to deteriorate as the rise in prices charged did not keep up with cost increases. Manufacturers’ margins, on the other hand, improved, according to the report.
It also points out that inflation is on its way down, and expected to fall further to 4.2 per cent in January which is likely to pave the way for an easing of monetary policy. HSBC expects two rate cuts of 25bp each over February and April, taking the repo rate to 6 per cent.
The flash PMI provides an advance indication of the final Manufacturing, Services and Composite PMI data for the ongoing month, and is released approximately one week prior to the release of the final PMI indices. The flash PMI is typically based on approximately 80 per cent-90 per cent of total PMI survey responses that are received each month, all of which are used in the final release.
(This article has been published via a syndicated feed)
