Feb manufacturing PMI rises to 56.9 on increased production, new orders

Owing to growth in factory production and sales, India's manufacturing sector grew at the fastest pace in five months, according to a private survey. 

India's HSBC India Manufacturing PMI came in at 56.9 in February, the fastest since October last year when it was 55.5. In January, it was 56.5. The manufacturing PMI has been above the 50-mark that separates growth from contraction for 32 months.

"Production rose at the fastest pace in five months, fuelled the quickest increase in sales since last September and the strongest expansion in new export orders for 21 months," it said. The growth is led by the capital goods category.  

"The HSBC final India Manufacturing PMI indicates that production growth continued to be strong, supported by both domestic and external demand," noted Ines Lam, economist at HSBC.

"Manufacturing firms' margins improved as input price inflation slipped to the lowest since July 2020."

Improved technology and increased sales bolstered greater output volumes, leading to an upturn in production.

Global demand improved robustly and the rate of expansion was the highest in almost two years. Demand from many countries and regions picked up -- Australia, China, the United States and the United Arab Emirates were some of those cited.

Optimism about the year ahead cooled marginally, with the future output index only dipping from January when it was at its highest since December 2022.

However, a strong and positive outlook failed to generate more employment in the sector. Survey participants reported sufficient staff for the current workflow.

Cost pressures rose at their weakest pace since mid-2020 - when the world was grappling with the Covid-19 pandemic.

A strong business outlook and muted inflationary pressures prompted firms to build up stocks of raw materials, pushing up the quantity of purchases sub-index substantially to its highest in five months.

The output price index eased to the joint lowest since March 2023 indicating an easing of inflationary pressures.

(With inputs from Reuters)