India's private sector activity bounces back in January on strong demand

New Delhi: India's private sector activity rebounded in January, with the HSBC Flash Composite Output Index rising to 59.5 in January from an 11-month low of 57.8 in December, fuelled by faster growth in new orders and output, according to a private survey released on Friday.

The index stood at 57.7 in January 2025. "After losing some momentum at the end of the 2025 calendar year, growth across India's private sector economy bounced back in January," the survey mentioned.

Looking ahead, business sentiment improved in January, with confidence climbing to a three-month high. Panellists cited efficiency gains, strong demand conditions, allocated marketing budgets, and favourable exchange rates as key tailwinds.

"Growth, as signalled by the HSBC flash PMI, picked up pace for both manufacturing and services," said Pranjul Bhandari, chief India economist at HSBC. New business inflows increased as strengthening demand and aggressive marketing efforts boosted sales. Manufacturers reported a sharper acceleration than service providers though growth gathered pace across both sectors.

International orders climbed to a four-month high, with Asia, Australia, Europe, Latin America, and the Middle East emerging as major destinations for Indian goods and services.

"Despite the rise in the manufacturing PMI, January's figure remained below the 2025 average," said Bhandari. "After losing some momentum at the end of 2025, new orders rose more rapidly - led by a faster pick up in domestic orders." Manufacturing PMI rose to 56.8 in January from 55 in December, while services increased to 59.3 from 58.

Hiring activity resumed in January following stagnation last month. Although modest, the pace of job creation was broadly in line with the series trend. Firms attributed the higher recruitment to efforts to better align resources with business needs, with additions at the junior and mid-level.

On the cost front, input prices rose at the fastest pace in four months in January, with the pressures more pronounced in the services sector. Output charges increased at a similar rate across manufacturing and services, resulting in the quickest rise in overall private sector charges in three months.