Operating conditions across India's manufacturing industry improved at the start of the year, although the new wave of COVID-19 somewhat restricted growth. While input cost inflation eased for the third month running, to the weakest since last September, factory gate charges rose at a quicker pace than in December. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) was at 54.0 in January, down from 55.5 in December and signalling the weakest improvement in the health of the sector since last September.
Still, the headline figure remained above its long-run average (53.6). January data showed the slowest increases in new orders and output in four months, but rates of expansion remained historically elevated. Similarly, there was a substantial, albeit softer upturn in input buying. Concurrently, concerns surrounding the pandemic, the possibility of further restrictions being introduced and price pressures dragged down business confidence to a 19-month low.
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