India’s Services and Manufacturing Sectors Surge in January

India’s economic landscape showed promising signs in January, as both the services and manufacturing sectors experienced notable growth. The Purchasing Managers’ Index (PMI) for services rose to 58.5, an increase from December’s 58, signaling a robust start to the year. This uptick follows the weakest expansion recorded in the past 15 months during December. Despite this improvement, January’s PMI remains below the 2025 average of 59.4, according to data released on February 4.

The positive trajectory in the services sector is echoed in manufacturing, where the PMI increased to 55.4 from December’s 55. This growth suggests a widespread recovery across critical segments of the Indian economy. Enhanced business activity coincides with expectations of stronger external and domestic support in 2026.

Business Sentiment and Economic Outlook

Business sentiment reached a three-month high in January, indicating a boost in confidence among companies. India’s economic outlook has been significantly strengthened due to trade agreements with the European Union and the United States. These agreements are anticipated to enhance export competitiveness and investment sentiment.

On February 2, US President Donald Trump announced a reduction in tariffs on Indian goods from 50% to 18%. Economists suggest that this trade deal could potentially add 20-30 basis points to India’s GDP growth.

Furthermore, the rise in PMI also reflects an improvement in the job market. Service providers began hiring again in January due to an increase in new work intakes. Nonetheless, job creation remained marginal, as many firms opted to maintain their current workforce levels, believing they had adequate resources to meet existing demands.

Price Pressures in the Services Sector

The report also highlighted that services firms reported increased prices for various goods, including eggs, electronic items, and meat. This rise in costs could impact consumer spending and overall economic dynamics moving forward.

Overall, the data from January paints a picture of resilience and potential growth for India’s economy, with both the services and manufacturing sectors showing signs of recovery and adaptation in a changing global landscape.