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India's manufacturing sector continues growth momentum in February with PMI of 56.9

01 Mar 2024 Evaluate

India's manufacturing sector continued growth momentum in the month of February, aided by growth in factory production and sales coupled with strongest expansion in new export orders. According to the report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 56.9 in February as against 56.5 in January, pointing the strongest improvement in the health of the sector since September 2023.

The survey noted that production levels were raised in tandem with a further steep increase in inflows of new orders, besides advanced technology and buoyant demand conditions. The upturn in manufacturing output was the strongest seen for five months and led by the capital goods category. Similarly, factory orders expanded at the quickest pace since September and one that was above the long-run series average, on the back of a positive demand environment.

Besides, new export orders rose at the fastest rate in nearly two years, with Australia, Bangladesh, Brazil, Canada, mainland China, Europe, Indonesia, the US and UAE emerging as sources of demand growth. Despite the uptick in growth momentum, manufacturing employment in India was little-changed halfway through the final fiscal quarter. Goods producers mentioned that payroll numbers were sufficient for current requirements.

On the price front, input costs increased only fractionally, with the rate of inflation subsiding to the weakest in the current sequence of inflation that stretches back to August 2020, while prices charged by Indian manufacturers increased at a slower rate, the joint-weakest since March 2023. There was sustained optimism among manufacturers regarding the year-ahead outlook for production. The overall level of confidence was the second-highest since December 2022.

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