India’s manufacturing growth fell in February, after rising to a six-month high in January, as sales and output growth retreated to a 14-month low, a private survey released on Monday said.
The HSBC India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, fell to 56.3 in February from 57.7 in January. It was 56.4 in December and 56.5 in November.
A PMI reading above 50 indicates an expansion, and below that indicates a contraction. The February PMI number was based on responses from 400 manufacturers.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) is still indicative of a further robust improvement in the health of the sector, the survey said.
“Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods,” it added.
The survey said output rose halfway through the final quarter of the fiscal year, extending the current growth streak to 44 months.
“Where an increase was noted, manufacturers remarked on sustained improvements in demand, tech investment and the commissioning of new projects,” the survey said.
“Although sharp overall, the rate of expansion eased to the weakest since December 2023,” it added.
India’s economic growth peaked in the December quarter after a dip in September but remained sluggish. GDP grew 6.2%, the slowest since Q4FY23, except for the previous quarter’s revised 5.6%.
This leaves a steep climb in the final quarter to meet the National Statistical Office’s revised full-year growth target of 6.5%.
Even if achieved, FY25 growth would be 270 basis points lower than last fiscal’s revised 9.2%.
“India recorded a 56.3 manufacturing PMI in February, down slightly from 57.7 during the prior month, but still firmly within expansionary territory. Robust global demand continued to boost growth in the Indian manufacturing sector, which increased its purchasing activity and employment,” said Pranjul Bhandari, chief India economist at HSBC.
“Business expectations also remained very strong, with nearly one-third of survey participants foreseeing greater output volumes in the year ahead. Although output growth slowed to the weakest level since December 2023, overall momentum in India’s manufacturing sector remained broadly positive in February,” Bhandari added.
“New export orders rose strongly in February, as manufacturers continued to capitalise on robust global demand for their goods. Although softer than January’s near 14-year high, the pace of expansion was sharp,” the survey said.
“In response to the upturn in new orders, manufacturers continued to expand their workforce numbers in February, extending the current period of employment growth to a year. The rate of job creation was the second-best in the series history, behind only that recorded in January.