January saw the Indian manufacturing sector climb back into expansion territory, as the industry recovered following the contraction seen at the end of last year.  Alongside a resumption of output at some firms impacted by December's flooding, manufacturers also benefited from rising inflows of new business from domestic and export clients.

At 51.1 in January, up from 49.1 in December, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance -moved back above the 50.0 mark. Although the rate of expansion was only moderate, it was the sharpest signalled for four months. 

Levels of production and total new business also registered mild increases following contractions in the prior survey month. The consumer goods sub-sector remained the principal growth engine at the start of the year, seeing substantial expansions of both output and new orders. In contrast, producers of investment goods saw output and new orders fall, while production volumes stagnated in the intermediate goods category.

The trend in new export order inflows strengthened during January, amid reports from companies of improved sales demand. The level of incoming new export business has now risen in each of the past 28 months.

January saw further mild job creation in the Indian manufacturing sector, with headcounts added to across the consumer, intermediate and investment goods categories. Where an expansion of payroll numbers was reported, this was generally linked to rising production requirements.

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