Indian manufacturing's strong start to 2025 continues in Feb: PMI data

Favourable domestic and international demand prompted firms to increase purchasing activity and hire extra workers at above-trend rates. However, demand buoyancy kept charge inflation at an elevated level despite softer cost pressures.

The seasonally-adjusted HSBC India manufacturing PMI registered 56.3 in the month, down from 57.7 in January, but still indicative of a further robust improvement in the health of the sector, S&P Global Ratings said in a release.

Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods.

Output rose halfway through the final fiscal quarter, 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.

Although sharp overall, the rate of expansion eased to the weakest since December 2023.

February data showed a forty-fourth consecutive rise in new business intakes, which panel members linked to strong client demand and efforts to price better than their competitors.

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.

In response to the upturn in new orders, manufacturers continued to expand their workforce numbers in the month, 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. One in ten firms signalled greater recruitment activity, while 1 per cent of companies shed jobs.

Manufacturers again ramped up purchasing activities, but the pace of expansion eased to a 14-month low. Where growth was signalled, firms stated that positive client interest led them to rebuild stocks and safeguard against potential input shortages.

As a result, pre-production inventories rose strongly again in February. This was supported by a twelfth successive improvement in average lead times.

Meanwhile, firms' use of warehoused goods to fulfil demand needs was highlighted in another fall in finished goods stocks.

Indian manufacturers faced another rise in input costs. Qualitative data showed that firms passed on higher labour costs to clients, facilitated by favourable demand conditions.

Firms expressed strong optimism about growth prospects for the coming year, with client demand expected to remain positive and support output. Unfinished business rose further in February, as demand growth continued to outpace increases in production.

ALCHEMPro News Desk (DS)