Manufacturing PMI Slows To Weakest Since December 2023 But Continues To Expand

Manufacturing PMI saw a mild loss of growth momentum in February, with the rate of expansion easing to the weakest since December 2023.

The seasonally adjusted HSBC India Manufacturing PMI stood at 56.3 in February, down from 57.7 in January, but still indicative of improvement in the health of the sector. Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods, stated the release published on Monday.

Where an increase was noted, manufacturers remarked on sustained improvements in demand, tech investment and the commissioning of new projects. 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. In response to the upturn in new orders, manufacturers continued to expand their workforce numbers in February, 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.

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

Manufacturers faced another rise in input costs, with frequent reports of greater bamboo, leather, marketing, rubber and telecom prices. Still, the overall rate of inflation eased for the third straight month to its weakest in a year.

Concurrently, the rate of charge inflation was little-changed from January, remaining above both its long-run average and that seen for 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.