India Breaking Buzz

February Saw a 5-Month High in India’s Manufacturing Sector Growth Due to Strong Demand

<p>According to a monthly survey released on Friday, industrial output and sales in India increased sharply in February, reaching a five-month high driven by strong local and foreign demand. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), which is seasonally adjusted, increased from 56.5 in January to 56.9 in February, signaling the biggest rise in the industry’s health since September 2023.</p>
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<p>According to the Purchasing Managers’ Index (PMI), a score of less than 50 indicates contraction while a print over 50 indicates growth. The study found that output increased at its quickest rate in five months, which in turn drove the greatest growth in sales since September of last year and the largest rise in new export orders in twenty-one months.</p>
<p>“The final India Manufacturing PMI from HSBC shows that production growth remained robust, driven by both internal and external demand,” HSBC economist Ines Lam said. There was little change in manufacturing employment in India despite the acceleration in development velocity. According to the poll, “goods producers mentioned that payroll numbers were sufficient for current requirements.”</p>
<p>In terms of inflation, selling charges increased somewhat while buying cost inflation dropped to a 43-month low. This was the smallest increase in input costs in more than three and a half years. According to Lam, manufacturing companies’ profit margins increased as input price inflation dropped to its lowest level since July 2020.</p>
<p>In addition to strong domestic demand, new export orders increased at the quickest pace in over two years, driven by demand from the US, UAE, mainland China, Australia, Bangladesh, Brazil, Canada, Europe, and Indonesia. According to the poll, manufacturing companies increased their purchasing levels in response to higher production demands, steady sales growth, and the need to create safety stockpiles. Manufacturers see a bright future for their businesses in the context of strong demand.</p>
<p>Data from a study conducted in February showed that manufacturers were upbeat about the output forecast for the next year. Since December 2022, this was the second-highest degree of confidence overall. Lam said, “Manufacturers have an optimistic outlook about future business conditions, buoyed by robust demand and improving profit margins.”</p>
<p>S&P Global compiles the HSBC India Manufacturing PMI using purchasing managers’ questionnaire answers in a panel of over 400 firms.</p>

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