India Manufacturing PMI Rises, Confidence Falls

India's manufacturing sector experienced a modest recovery in January, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) rising to 55.4 from 55 in December. This indicates expansion, driven by stronger new order inflows, increased production, and continued employment growth. Despite this upturn, business confidence among manufacturers fell to its lowest level since July 2022, with only 15% of surveyed companies expecting output growth in the coming year. Input costs rose at the fastest pace in four months, while output charge inflation eased to a 22-month low, leading to slight margin pressure for manufacturers. Domestic demand was the primary driver of sales, with export orders also increasing but at a weaker pace. Pranjul Bhandari of HSBC noted the rebound but highlighted the muted business confidence. India's finance minister, Nirmala Sitharaman, also outlined measures in the Union Budget for FY27 to sustain growth, while S&P Global — CRISIL Ratings warned of potential normalization in growth amid global challenges.