India PMI jumps to 59.3 in February as manufacturing surge boosts private sector growth

India’s private sector expanded at a faster pace in February, powered by a sharp pick-up in manufacturing activity and strong domestic demand, according to a flash survey released on Thursday.

The HSBC flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.3 in February from 58.4 in January, the highest level in three months and slightly above the Reuters poll median forecast of 59.0. A reading above 50 indicates expansion.

The upturn was driven by robust growth in new orders, which rose at the fastest pace since November. Businesses attributed stronger sales to healthy domestic demand, improved marketing efforts and buoyant local tourism. International orders also strengthened, rising at their quickest rate in five months.

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Manufacturing activity led the acceleration. The flash manufacturing PMI climbed to 57.5 from 55.4 in January, signalling stronger factory output and sales. Production growth among goods producers reached a four-month high.

Services activity, however, was broadly steady. The services PMI came in at 58.4 compared with 58.5 in January. While service firms saw new business growth ease to a 13-month low, they continued to outperform manufacturers in export demand.
Improved sales momentum supported hiring, with companies increasing staffing levels at a faster pace. Business confidence about output in the year ahead also rose to its strongest level in 12 months.

However, the survey pointed to intensifying inflationary pressures. Input costs rose at their fastest pace in 15 months, pushing output charge inflation to a six-month high. Service firms faced the sharpest rise in input prices in two-and-a-half years, while factory input price inflation remained unchanged from January.

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The combination of solid growth and rising cost pressures could complicate the Reserve Bank of India’s policy stance. Retail inflation stood at 2.75 per cent last month following revisions to the consumer price index basket and base year.

According to a Reuters survey, the central bank is expected to keep its key policy rate unchanged at 5.25 per cent through the year, balancing growth momentum with inflation risks.

The latest PMI data suggest India’s economic expansion remains resilient, with manufacturing emerging as the key driver of private sector strength.