MUMBAI: The manufacturing and services sectors activity rose to 59.5 in January from 57.8 in December, but the number is below the average printed in the previous year, according to private survey.
This seasonally adjusted index, which tracks month-on-month changes in the combined output of the two sectors, indicated a slower rate of expansion. Both manufacturing and services showed similar growth rates during the month, HSBC India said its composite PMI data, compiled by S&P Global on Friday.
"Growth, as signalled by the flash PMI, has picked up pace for both manufacturing and services. Despite the rise in the manufacturing PMI, January figure remains below the 2025 average. After losing some momentum at the end of 2025, new orders rose more rapidly, led by a faster pick up in domestic orders. Input cost pressures rose quickly, though more for goods producers than for service providers," said HSBC India chief economist Pranjul Bhandari.
A rise in new business mainly drove faster growth in private sector activity. Companies said they saw better demand from customers and benefited from strong marketing efforts. Manufacturing firms reported a quicker increase in sales compared to service providers, though both sectors saw improvement, she said.
January also saw a clear rise in international orders, the strongest growth in exports in the past four months. Domestic companies received more orders from regions such as Asia, Australia, Europe, Latin America, and the Middle East, adding further support to overall business growth.
Private sector hiring picked up, after staying flat in the previous month. The increase in jobs was small, but it was in line with the usual long-term trend. Companies said they hired to better match their workforce with business needs, mainly adding junior- and mid-level employees.
In the manufacturing sector, companies not only hired more but also spent more on raw materials. Purchases rose faster than in December, showing overall strong growth.
Reflecting better conditions, the manufacturing PMI rose to 56.8 in January from 55 in December, marking the best improvement in operating conditions since October.
While costs for inputs and prices charged by companies increased slightly compared to December, overall inflation remained at moderate levels, suggesting that despite faster growth, price pressures are still largely under control.
Companies passed on higher costs to customers to protect their profit margins. They reported higher spending on inputs such as food items like eggs, meat, and vegetables, as well as fuel and steel. Labour and transport costs also added to overall expenses.
The private sector remains optimistic, expecting strong growth in the coming months. While confidence levels are still below the long-term average, optimism is at a three-month high. Businesses said better efficiency, strong demand, and planned spending on marketing were expected to support growth in the coming months.