India Flash Composite PMI Rises to 59.3 in February on Factory Output Gains

India’s private sector expanded at a faster pace in February, supported by robust manufacturing output and steady services activity, according to a flash survey compiled by S&P Global.

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HSBC’s flash India Composite Purchasing Managers’ Index (PMI) rose to 59.3 in February from 58.4 in January, marking the strongest expansion in three months and remaining above the 50 threshold that separates growth from contraction. The reading was also higher than the Reuters poll median forecast of 59.0.

Manufacturing Drives Overall Expansion

Goods producers were the first to report an improvement in the overall activity, and manufacturing firms increased their sales at a sharper rate. The PMI of flash manufacturing rose to 57.5 in February as compared with 55.4 in January.

The manufacturing industry increased its output by four months of the highest growth with the total new orders showing a great increase. Total new business grew at the most rapid rate since November, according to the survey. Companies blamed the returns on strong market demand, domestic tourism activities, and marketing efforts.

Also, international sales were boosted as they increased at the quickest rate in five months, and it aided in overall demand momentum. The export orders supported activity in both the manufacturing and services segments.

Services Growth Broadly Steady

In contrast to the stronger manufacturing performance, the services sector showed little change in growth momentum. The flash services PMI was recorded at 58.4 in February, compared with 58.5 in January.

While services firms continued to outperform manufacturers in terms of export orders, growth in new business eased to a 13-month low. Despite this moderation, the sector remained firmly in expansion territory.

The composite reading reflected continued resilience in the services industry, even as the pace of new order growth softened compared to previous months.

Hiring and Business Confidence Improve

The survey revealed that better sales led to better employment creation. In February, the firms were hiring more rapidly as the conditions of the demand improved.

Business confidence in the activity ahead of the year also increased as they hit the highest mark after one year. The companies mentioned their long-term demand expectations and growth strategies as a cause of hope.

Inflationary Pressures Intensify

The survey also showed rising price pressures. Input costs increased at the fastest rate in 15 months, contributing to a rise in output charge inflation to a six-month high.

Services firms reported the steepest increase in input price inflation in two-and-a-half years, while input price inflation for manufacturers remained unchanged from January levels.

The data follows official figures showing India’s retail inflation rose 2.75% last month, after the statistics ministry updated the consumer price index basket and revised the base year to 2024. According to a Reuters survey, the

Reserve Bank of India is expected to keep its key policy rate unchanged at 5.25% this year.
India’s flash Composite PMI rose to 59.3 in February, led by stronger manufacturing activity, while input cost pressures increased, according to S&P Global data.