HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, went up to 61.0 in Jan this year, up from December's final reading of 58.5, the highest since September 2023.

The index has now been above the 50-mark that separates expansion from contraction for the 30th consecutive month.

Service providers noted a stronger increase in activity than manufacturers, but growth accelerated in both cases keeping the country on course as the world’s fastest growing major economy, according to the report.

The manufacturing PMI rose to 56.9 in January from 54.9 last month. Activity in the dominant services industry also accelerated at a sharper rate, with its PMI rising to 61.2 this month from 59.0 in December.

“Survey participants mainly attributed the upturn to favourable economic conditions, demand strength and ongoing improvements in new business inflows. Aggregate sales increased at a sharp pace in January, and one that was the fastest in six months. Both manufacturing firms and their services counterparts recorded quicker rates of expansion in new orders,” the report states.

The rise in total new business inflows was supported by the most marked increase in international orders since last October.

However, the report also notes that although overall output prices rose at a slower rate in January, input costs increased at the sharpest pace since August 2023, which reflects signs of rising price pressures that could emerge ahead.