India’s manufacturing sector growth expanded for the second consecutive month in February, as a rebound in export demand contributed to a stronger expansion of total new orders. Manufacturers benefited from recovering demand and raised production volumes in response to another expansion in inflows of new work. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 50.7 in February from 50.4 in January.
According to the survey, the upturn in output for last two successive months reflected improved demand from both the domestic and external markets. The total volume of incoming new work increased for the second month in a row, whereas new export orders expanded for the first time since November 2016. Rates of growth for both production and order books picked up since January, but remained marginal. Increased new order intakes contributed to a further rise in outstanding business. Furthermore, the rate of backlog accumulation was the fastest since last October.
The survey also pointed that manufacturing employment declined, though the rate of job losses was marginal overall. Input price inflation quickened in February, with the rate of increase accelerating to the fastest in two and-a-half years.
Noting that the vast majority of survey participants signalled unchanged payroll numbers, the survey stated that confidence among Indian manufacturers was relatively subdued in February. Although sentiment towards the year-ahead outlook for output remained positive, the degree of optimism fell since January and was well below its near five-year historical average.