India’s Manufacturing PMI Rebounds in January

India’s manufacturing sector regained momentum at the start of 2026, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) rising to 55.4 in January from 55.0 in December, which marked a two-year low. The latest reading signals a stronger improvement in operating conditions across the sector.

A PMI reading above 50 indicates expansion, while a reading below that level signals contraction.

The January rebound was driven by faster growth in new orders and output. Manufacturers cited buoyant domestic demand, improved marketing efforts, and continued investments in technology as key factors supporting growth. Production expanded at a quicker pace compared with December, while new business increased across both domestic and export markets.

To meet higher workloads, firms raised purchasing activity at a faster rate, supported by restocking efforts and a desire to guard against potential supply shortages.

Employment levels continued to rise, recording the quickest pace of job creation in three months, although overall hiring growth remained modest. Despite the improvement in activity, business confidence weakened, slipping to a three-and-a-half-year low. Only a small proportion of firms expect output to rise over the coming year, reflecting concerns about margins and the sustainability of demand.

Commenting on the data, Pranjul Bhandari, Chief India Economist at HSBC, said Indian manufacturing firms experienced a rebound in January due to stronger new orders, output, and employment. She noted that input costs rose moderately, while the pace of increase in factory-gate prices eased, leading to slight margin pressure. Despite the improvement in activity, business confidence remains muted, with expectations for future output falling to their lowest level since July 2022.

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