By Anant Chandak
BENGALURU, Jan 23 (Reuters) – Private sector activity started 2026 on a positive note as growth accelerated in January on stronger demand, prompting businesses to step up hiring, a survey showed on Friday.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to 59.5 this month from December’s 11-month low of 57.8 and was higher than a Reuters poll median expectation of 58.0. A reading above 50.0 indicates growth and below that level points to a contraction.
The uptick was fuelled by stronger new orders – a key gauge for demand – that improved sales across both manufacturing and service sectors, with the former recording a slightly faster expansion.
“Despite the rise in the manufacturing PMI, January’s figure remained below the 2025 average,” said Pranjul Bhandari, chief India economist at HSBC. “After losing some momentum at the end of 2025, new orders rose more rapidly – led by a faster pick up in domestic orders.”
Also, new export orders grew at the strongest pace in four months. That was despite the U.S. – the largest trading partner – slapping 50% tariffs on Indian goods exports to the country last year. Indian and American leaders are holding discussions for a trade deal after the negotiations collapsed last year.
The manufacturing PMI rose to 56.8 in January from 55.0 in December, its highest since October. Services activity also gathered momentum with the activity index edging up to 59.3 from 58.0 last month.
Stronger growth prompted businesses to resume hiring, albeit modestly, after employment levels had stalled last month.
Input price inflation accelerated to a four-month high with service providers reporting more pronounced cost pressures than manufacturers. Firms passed on higher costs to customers, with output price inflation reaching a three-month high.
Still, business confidence improved to a three-month high in January, suggesting India’s economy remains on a strong footing ahead of the budget on February 1, which is expected to focus on fiscal consolidation.
(Reporting by Anant ChandakEditing by Shri Navaratnam)
Comments