India’s manufacturing sector experienced a slowdown in February, as reflected in the latest Purchasing Managers’ Index (PMI) compiled by S&P Global and released by HSBC. The PMI declined to 56.3 from 57.7 in January, marking a 14-month low.
Despite the decline, the survey indicated that manufacturing activity remained in expansionary territory, as reading above 50 signifies growth. The rates of expansion in output and sales, though slower, continued to be strong relative to the survey’s 20-year history. Growth was observed across all three monitored sub-sectors: consumer, intermediate, and investment goods.
According to HSBC Chief India Economist Pranjul Bhandari, the PMI decline in February was marginal, and the manufacturing sector remained supported by robust global demand. Increased purchasing activity and employment levels were noted among Indian manufacturers, driven by favorable domestic and international conditions.
New Business and Export Orders Continue to Grow
The survey highlighted that February marked the 44th consecutive month of expansion in new business orders. Strong client demand and competitive pricing strategies contributed to this trend. On the export front, new orders continued to rise, supported by global demand. While the rate of expansion in exports was slightly lower than January’s near 14-year high, it remained significant.
Employment and Input Costs
Employment levels in the manufacturing sector continued to increase, with job creation extending for a full year. The rate of hiring was the second-highest in the survey’s history, following January’s record level. Around 10% of surveyed firms reported increased recruitment activity, while only 1% reported job reductions.
Regarding input costs, manufacturers faced continued price increases, particularly for materials such as bamboo, leather, marketing supplies, rubber, and telecom components. However, overall inflationary pressure eased for the third consecutive month, reaching its lowest level in a year. Despite this, firms maintained elevated pricing strategies, passing on some higher costs to clients amid favorable demand conditions.
The survey concluded that while manufacturing growth slowed in February, overall momentum in the sector remained positive, with businesses optimistic about output growth in the coming months.
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