The HSBC Flash India Composite Output Index, which tracks the combined performance of the country’s manufacturing and services sectors, increased to 59.5 in January from 57.8 in December, according to S&P Global data released on Friday. The seasonally adjusted index, reflecting month-on-month changes in overall output, suggested a steady pace of expansion. Both manufacturing and services sectors grew at similar rates during the month.

HSBC Chief India Economist Pranjul Bhandari noted that growth in both sectors accelerated, although January’s manufacturing PMI remained below the 2025 average. After a slowdown at the end of 2025, new orders rebounded, primarily driven by domestic demand. Input cost pressures rose, more so for manufacturers than service providers. Faster growth in the private sector was largely fueled by a rise in new business. Companies reported stronger customer demand and the impact of effective marketing strategies. While manufacturing firms saw quicker sales growth than service providers, both sectors improved.

January also recorded a notable rise in international orders, marking the strongest export growth in four months. Indian firms received more orders from Asia, Australia, Europe, Latin America, and the Middle East, further supporting overall growth. Private sector hiring increased in January after remaining flat in December. Although the rise was modest, it aligned with long-term trends, with firms mainly adding junior- and mid-level employees to meet business needs.

In manufacturing, companies not only hired more staff but also increased spending on raw materials. Purchases accelerated compared to December, reflecting improved operating conditions. The HSBC Flash India Manufacturing PMI rose to 56.8 from 55.0, marking the best improvement since October. While input and output prices edged higher compared to December, inflation remained moderate, indicating that price pressures are still largely under control. Companies reported passing higher costs onto customers, with increased spending on items such as food, fuel, steel, labor, and transportation. Indian private sector firms remained optimistic about future growth. Confidence rose to a three-month high, supported by expectations of strong demand, improved efficiency, and planned marketing expenditures.