Weekly Economic Outlook: February 02-08, 2026
- Remin Francis I R
- 2 days ago
- 2 min read
Last week offered a useful snapshot of how global and domestic economies are shaping up as we move deeper into 2026. The data showed resilience in growth, but also highlighted areas where caution is slowly creeping in.
In India, manufacturing activity stayed on a solid footing. The HSBC India Manufacturing PMI edged up to 55.4 in January from 55.0 in December, though it was revised lower from the initial 56.8 estimate. Factory output expanded at a faster pace, largely supported by strong domestic demand. New orders continued to rise, exports saw a modest pickup, and hiring improved at the fastest pace in three months. However, rising input costs, at a four-month high, and business confidence slipping to a three-and-a-half-year low, with only 15% of firms expecting higher output, suggest that optimism is becoming more measured.
India’s services sector also delivered a stable performance. The HSBC India Services PMI was revised to 58.5, higher than December’s 58.0. Growth in output and new business remained healthy, prompting firms to resume hiring, albeit marginally. Cost pressures picked up due to higher prices of food items, electronics, and raw materials, and companies passed on some of these costs, with selling prices rising at the fastest pace in three months. Encouragingly, business sentiment improved to a three-month high.
Globally, the US surprised on the manufacturing front. The ISM Manufacturing PMI jumped to 52.6 in January from 47.9 in December, marking the first expansion in 12 months. New orders and production strengthened sharply, although employment and inventories stayed in contraction. The services sector remained resilient, with the ISM Services PMI holding steady at 53.8, even as price pressures increased.
On inflation and policy, the Euro Area inflation eased to 1.70%, down from 2% in December. Central banks largely stayed cautious. The RBI kept the repo rate unchanged at 5.25% while raising its FY2025/26 growth forecast to 7.4%. The Bank of England and the ECB also held rates steady, signalling that future moves will be closely tied to incoming data.
Adding to India’s macro comfort, foreign exchange reserves touched an all-time high of USD 723,770 million, reinforcing overall economic stability.
Overall, last week’s data pointed to steady growth momentum, but with rising costs and global uncertainties keeping policymakers and markets on alert.
Want to read more?
Subscribe to finsightsbysquareleague.com to keep reading this exclusive post.
