India’s economic momentum grows as business activity surges in January

The survey results suggest that India, as Asia’s third-largest economy, is poised to maintain its position as the fastest-growing major economy in the near term. A poll on Wednesday projected a 6.9% growth for the current fiscal year, affirming the positive trajectory.

India’s economic landscape is showing signs of robust growth as business activity expanded at its fastest pace in four months, fueled by heightened demand, according to a private survey. The HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, soared to 61.0 in January, marking its highest level since September and continuing the country’s streak of economic expansion for the 30th consecutive month.

The survey results suggest that India, as Asia’s third-largest economy, is poised to maintain its position as the fastest-growing major economy in the near term. A poll on Wednesday projected a 6.9% growth for the current fiscal year, affirming the positive trajectory.

Notably, the acceleration in business activity was underpinned by a surge in manufacturing output, with the manufacturing PMI rising to 56.9 in January from 54.9 the previous month. Simultaneously, the services industry, a dominant force in India’s economy, also experienced a sharper rate of acceleration, with its PMI climbing to 61.2 in January from 59.0 in December.

Pranjul Bhandari, Chief India Economist at HSBC, emphasized that the economy experienced accelerated growth in January. This was attributed to a notable increase in manufacturing output and a heightened level of activity in the business services sector, which demonstrated greater resilience.

This uptick in economic performance is reflected in the fact that new orders, particularly international ones, rose at a faster pace compared to the previous month, signaling resilience and increasing global demand.

Furthermore, the survey indicated that firms are optimistic about the future, with improving demand boosting expectations for the coming 12 months. Manufacturing, in particular, witnessed a surge in optimism, with future output reaching its highest level in over nine years. This positive sentiment has translated into continued employment growth, marking the 20th consecutive month of hiring. However, the services industry took the lead in employment generation during this period.