New Delhi, March 3 The Indian manufacturing sector's strong start to 2025 continued in February. Despite slowing to the weakest since December 2023, rates of expansion in output, employment and sales remained elevated in the context of the long-run average, according to the HSBC survey released on Monday.
Favourable domestic and international demand prompted firms to increase purchasing activity and hire extra workers at above-trend rates. However, demand buoyancy kept charge inflation at an elevated level despite softer cost pressures, the HSBC Manufacturing Purchase Manager’s Index survey states.
"India recorded a 56.3 manufacturing PMI in February, down slightly from 57.7 during the prior month, but still firmly within expansionary territory. Robust global demand continued to boost growth in the Indian manufacturing sector, which increased its purchasing activity and employment,” said Pranjul Bhandari, Chief India Economist at HSBC.
“Business expectations also remained very strong, with nearly one-third of survey participants foreseeing greater output volumes in the year ahead,” Bhandari added.
Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods. Output rose halfway through the final fiscal quarter, extending the current growth streak to 44 months. Where an increase was noted, manufacturers remarked on sustained improvements in demand, tech investment and the commissioning of new projects. Although sharp overall, the rate of expansion eased to the weakest since December 2023, the survey states.
February data showed a 44th consecutive rise in new business intakes, which panel members linked to strong client demand and efforts to price better than their competitors.
The overall pace of growth receded to the slowest since December 2023 but was above its long-run average. New export orders rose strongly in February as manufacturers continued to capitalise on robust global demand for their goods. Although softer than January's near 14-year high, the pace of expansion was sharp, the survey states.
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, it points out.
One in ten firms signalled greater recruitment activity, while 1 per cent of companies shed jobs. Manufacturers again ramped up purchasing activities, but the pace of expansion eased to a 14-month low. Where growth was signalled, firms stated that positive client interest led them to rebuild stocks and safeguard against potential input shortages. As a result, pre-production inventories rose strongly again in February. This was supported by a 12th successive improvement in average lead times, the survey added.
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