India’s manufacturing sector entered the end of this fiscal (FY24) with a further pick-up in growth in February, according to the HSBC India purchasing managers’ index (PMI). The seasonally-adjusted HSBC India manufacturing PMI recovered further from December’s 18-month low, rising from 56.5 in January to 56.9 in February, pointing to the strongest improvement in the health of the sector since September last year. 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, according to a release from S&P Global.
An improvement in demand for raw materials, meanwhile, supported the rebuilding of input inventories, while supplier delivery times were broadly stable. Concurrently, purchasing cost inflation retreated to a 43-month low, with selling charges increasing to a lesser extent as a result. Production levels were raised in tandem with a further steep increase in inflows of new orders. The upturn in manufacturing output was the strongest seen for five months. Similarly, factory orders expanded at the quickest pace since September and one that was above the long-run series average. Firms indicated that marketing efforts continued to bear fruit, helped by a positive demand environment. Input costs meanwhile increased only fractionally, with the rate of inflation subsiding to the weakest in the current sequence of inflation that stretches back to August 2020.
Prices charged by Indian manufacturers increased at a slower rate, the joint-weakest since March 2023. February saw a further pick-up in manufacturers’ purchasing activity, with the rate of growth up to the fastest since September 2023. Firms reportedly scaled up buying levels in response to greater production requirements, sustained increases in sales and to build safety stocks. Despite the uptick in growth momentum, manufacturing employment in India was little changed halfway through the final fiscal quarter. The February survey data also indicated sustained optimism among manufacturers regarding the year-ahead outlook for production. The overall level of confidence was the second-highest since December 2022.
