India’s private sector growth bounced back in January after dip in December
Manufacturing and services sectors witnessed increases in output, with rates of growth broadly similar
India’s private sector kicked-off on a stronger run in 2026, with economic activity picking up pace in January, as demand strengthened and companies upped hiring, flash survey results from S&P Global showed on Friday.
HSBC Flash India Composite Output Index rose to 59.5 in January from an 11-month low of 57.8 in December. Manufacturing and services sectors witnessed increases in output, with rates of growth broadly similar. Manufacturing Purchasing Managers’ Index (PMI) climbed to 56.8 from 55.0 in December, while Services PMI Business Activity Index increased to 59.3 from 58.0.
The HSBC index is a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors.
According to survey, sales were fuelled by strengthening demand conditions and aggressive marketing campaigns. The January data showed a marked upturn in aggregate international orders, one that was the greatest in four months. Asia, Australia, Europe, Latin America and the Middle East featured in the qualitative part of the survey as the main destinations for Indian goods and services in January.
The survey showed that the hiring across India’s private sector resumed in January, following no change in employment during December. Although slight, the pace of job creation was broadly aligned with the series trend. Anecdotal evidence showed that recruitment stemmed from efforts to better align resources with business requirements.
Manufacturing-specific data showed that, in addition to employment, firms spent more on materials. Buying levels increased at a quicker pace than in December, and one that was sharp overall.
“Despite the rise in the manufacturing PMI, January’s figure remained below the 2025 average. After losing some momentum at the end of 2025, new orders rose more rapidly, led by a faster pick up in domestic orders. Input cost pressures rose quickly though more for goods producers than for service providers,” Pranjul Bhandari, Chief India Economist at HSBC, was quoted as saying in a survey.
In terms of the business volumes, the January data showed back-to-back outstanding increases across the private sector, but the rate of accumulation was marginal and solely driven by an uptick among goods producers. Service providers generally indicated that they were able to complete existing work in a timely manner.
Furthermore, input prices at the composite level rose at the quickest pace in four months during January, albeit one that was modest by historical standards. Underlying data showed that cost pressures were more pronounced in the service economy. At the same time, rates of output price inflation across the manufacturing and services categories matched. When combined, they showed the fastest increase in private sector charges for three months. That said, the respective seasonally adjusted index was equal to its long-run average.
