Strong manufacturing growth lifts India's private sector in February, PMI shows

BENGALURU: India's private sector accelerated in February led ​by robust demand for goods ​even as services growth was broadly steady, according to ​a survey that also showed intensifying inflationary pressures.

HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 59.3 in February from January's 58.4 - the ‌strongest in ⁠three months ⁠and above a Reuters poll median forecast of 59.0. The 50-mark separates expansion from contraction.

The improvement was supported by robust total new orders which rose at the quickest ​pace since November. Businesses attributed gains to strong demand, local tourism and marketing efforts. International sales also increased at the fastest pace in five months, ​bolstering overall demand.


Goods producers reported a sharper ⁠rise in ‌sales, pushing output growth to a four-month high. ​Services firms, ​however, saw growth in new business ease to a 13-month ⁠low, even as they outperformed manufacturers on export orders.

While the preliminary headline reading for manufacturing PMI rose to 57.5 from 55.4, the services PMI was little changed at 58.4 versus 58.5 in January.

Better sales supported hiring at a faster pace and optimism about year-ahead activity improved to its strongest in a year.

The survey also showed higher price pressures with input costs rising at ‌their fastest rate in 15 months and pushing overall output charge inflation to a six-month high. Services firms faced ​the steepest rise ​in input price ⁠inflation in two-and-a-half years, while factory input price inflation remained unchanged from January.

That combination of solid growth and rising costs, especially for services, will keep ​the Reserve Bank of India cautious as retail inflation rose 2.75% last month, after the statistics ministry updated the consumer price index basket and the base year to 2024.

The central bank is expected to hold its key policy rate at 5.25% this year, according to a Reuters survey.