Indian economy on strong footing! Business activity expands at fastest pace in four months – shows PMI data

India’s business activity expanded at the fastest pace in four months in January on stronger demand, according to a private survey. The survey also showed that input costs rose at the quickest rate since August. The findings indicate that India, Asia’s third-largest economy, is likely to maintain its position as the fastest-growing major economy in the near term.
According to a Reuters poll, India is expected to grow by 6.9% in the current fiscal year.HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, reached 61.0 this month, its highest level since September, according to Reuters.
This marks the 30th consecutive month that the index has been above the 50-mark, which separates expansion from contraction. Pranjul Bhandari, chief India economist at HSBC, noted that the economy grew at a faster pace in January, driven by stronger manufacturing output and more robust business services activity.New orders, especially international orders, increased at a faster pace compared to the previous month. Manufacturing PMI rose to 56.9 in January, while the services industry also experienced accelerated activity, with its PMI rising to 61.2.
Demand played a significant role in this growth, with factory new orders growing at the fastest pace in four months and new business in the services sector increasing at its fastest rate since July 2023. Firms in India have shown improved expectations for the next 12 months, particularly in manufacturing, as future output reached its highest level in over nine years.

Employment generation continued for the 20th consecutive month, with the services industry witnessing higher job creation. However, input costs rose at the sharpest pace since August 2023, raising concerns about elevated price pressures.
Retail inflation in India reached a four-month high in December, and the Reserve Bank of India is expected to keep interest rates unchanged until at least July, according to a Reuters poll.

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