HSBC Flash India PMI indicates robust economic conditions continue in January

The Indian economy continued to see robust growth in the New Year, with the HSBC Flash India Composite PMI Output Index registering a growth of 61 in January.   

“The health of the Indian private sector economy improved substantially in January, according to HSBC Flash India PMI data, as a sharper upturn in new work intakes fuelled output growth,” said the inaugural flash results released on Wednesday, adding that this was inside expansion territory for the thirtieth successive month.   

“Moreover, rising from 58.5 in December, the latest figure pointed to the sharpest rate of growth since September 2023,” the release further said.  

Service providers noted a stronger increase in activity than manufacturers, but growth accelerated in both cases. Survey participants mainly attributed the upturn to favourable economic conditions, demand strength and ongoing improvements in new business inflows, it said.  

The rise in total new business inflows was supported by the most marked increase in international orders since last October.  

Meanwhile, the HSBC Flash India Services PMI Business Activity Index was at 61.2 in January as against December’s final of 59 while the HSBC Flash India Manufacturing PMI Output Index in January was at 60.5 versus 57.4 in December.  

The HSBC Flash India Manufacturing PMI Output Index also rose to 60.5 in January from a final of 57.4 in December.  

“Flash India PMIs provide an advance indication of the Final Manufacturing, Services and Composite PMI data, and are released approximately one week prior to the release of the Final PMI indices,” said a separate release, adding that the Flash PMI is typically based on approximately 75%-85% of total PMI survey responses that are received each month (all of which are used in the final release).   

“The flash estimates are calculated, weighted and seasonally adjusted using an identical methodology to the Final PMI,” it said.  

The average divergence between the flash and final PMI is not very significant and is usually not more than 0.5 points.  

Pranjul Bhandari, Chief India Economist at HSBC, said, “The economy grew at a faster pace in January, led by stronger manufacturing output, as well as more robust business services activity. New orders rose at a faster pace than a month ago, and within that, international orders were stronger than before. Input prices rose quickly, but output prices were raised to a smaller extent.”  

The data comes at a time when there is expectation that growth in the fourth quarter of the fiscal could slow down even though the economy is projected to grow by 7.3% this fiscal. This is one of the last macro economic data sets that come out ahead of the Interim Budget 2024-25 that will be presented by Union finance minister Nirmala Sitharaman on February 1.