India’s private sector activity staged a strong rebound in January 2026, rising to an 11-month high, as growth momentum returned across both manufacturing and services. According to the HSBC Flash India Purchasing Managers’ Index (PMI), the composite output index climbed to 59.5 in January, up from 57.8 in December, when growth had slowed to an 11-month low.
A PMI reading above 50 indicates expansion.
The recovery was driven by stronger new orders, higher output, renewed hiring activity, and improved business confidence, offering an important signal for policymakers ahead of the Union Budget 2026.
Manufacturing and Services Gain Momentum
Both manufacturing and services recorded faster growth in January, with broadly similar expansion rates.
- The Manufacturing Output Index rose to 59.9, from 57.3 in December.
- The Services Business Activity Index increased to 59.3, compared with 58.0 in the previous month.
The headline Manufacturing PMI climbed to 56.8, up from 55.0 in December, marking the strongest improvement in operating conditions since October 2025.
New Orders and Export Demand Improve
Growth in overall new business accelerated in January, supported by stronger demand conditions and aggressive marketing efforts. Manufacturers reported a sharper rise in new orders than service providers, though both sectors showed improvement.
Export demand also strengthened, with international orders rising at the fastest pace in four months. Firms cited increased demand from Asia, Australia, Europe, Latin America and the Middle East.
Hiring Resumes After December Pause
Hiring activity resumed across India’s private sector in January after remaining unchanged in December. Although job creation was modest, it was in line with long-term trends.
Recruitment focused largely on junior- and mid-level positions, as companies aligned workforce capacity with rising business activity.
Input Costs and Output Prices Rise
Input cost inflation rose to a four-month high in January, though it remained moderate by historical standards. Cost pressures were more pronounced in the services sector, while manufacturers reported higher raw material expenses.
Output prices increased at the fastest pace in three months, as firms passed on higher input, labour and transportation costs. Businesses cited rising prices of food items, fuel and steel as key contributors.
Business Confidence Improves
Business sentiment improved to a three-month high, though it remained below the long-term average. Companies expressed optimism about the year ahead, supported by efficiency gains, steady demand, higher marketing spending and favourable exchange rates.
HSBC on the PMI Rebound
Commenting on the data, Pranjul Bhandari, Chief India Economist at HSBC, said growth regained momentum across both sectors.
“Growth, as signalled by the HSBC Flash PMI, picked up pace for both manufacturing and services. After losing some momentum at the end of 2025, new orders rose more rapidly—led by a faster pickup in domestic demand. Input cost pressures rose, though more for goods producers than for service providers,” she said.