India’s manufacturing sector booms in February, hits five-month high on strong demand

- March 1, 2024
| By : Patriot Bureau |

The survey noted a significant increase in production, sales, and new export orders, resulting in a remarkable upturn in the sector's fortunes

Representational photo: Unsplash

India’s manufacturing sector experienced a noteworthy growth spurt in February, reaching its highest level in five months. This improvement was driven by a surge in factory production and sales, buoyed by both domestic and external demand, as revealed in the monthly survey released on Friday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) climbed from 56.5 in January to 56.9 in February, marking the most robust progress in the industry’s health since September 2023. A PMI score above 50 indicates expansion, while a score below 50 signifies contraction.

The survey noted a significant increase in production, sales, and new export orders, resulting in a remarkable upturn in the sector’s fortunes. Ines Lam, an Economist at HSBC, emphasised that both domestic and external demand continued to fuel the production growth, leading to a positive impact on the sector’s health.

Despite the enhanced growth momentum, the survey found that there was little change in manufacturing employment, with employers indicating that current workforce levels were adequate for their needs.

On the inflation front, the survey revealed a significant drop in purchasing cost inflation to a 43-month low, resulting in less substantial increases in selling prices. Input costs experienced their slowest rise in over three-and-a-half years, which led to improved margins for manufacturing firms.

In addition to robust domestic demand, new export orders grew at the fastest pace in nearly two years, with countries like Australia, Bangladesh, Brazil, Canada, China, Europe, Indonesia, the US, and UAE being the main sources of demand growth.

Manufacturers increased their buying levels in response to growing production requirements and sustained sales, with some also building safety stocks. The overall business outlook remains bullish for manufacturers, with sustained optimism about future production and demand conditions.

The survey, compiled by S&P Global from responses by purchasing managers in a panel of around 400 manufacturers, indicates a promising trajectory for India’s manufacturing sector, with firms projecting a buoyant future.

(with PTI inputs)