India’s manufacturing and services sectors kicked off February with a bang, as the HSBC Flash India PMI climbed to a three-month peak of 59.3, up from January’s 58.4. This robust reading, compiled by S&P and released on Friday, signals sustained momentum in the private sector despite lingering inflationary pressures.
The primary driver behind this uptick was a sharp acceleration in factory output, while services activity held steady at levels seen last month. Pranjul Bhandari, Chief India Economist at HSBC, highlighted the manufacturing industry’s strength, fueled by robust domestic orders and production gains. ‘February marked the strongest overall expansion since last September,’ she noted.
Businesses across both sectors expressed optimism for the future, even as input costs and output prices rose briskly. Private firms welcomed a surge in total new orders and international sales, prompting hiring sprees and ramped-up production. Manufacturers outpaced services providers in sales growth, recording their fastest pace in four months.
Demand strengthened due to robust local tourism, marketing initiatives, and heightened customer inquiries. Services firms, however, faced headwinds from competitive pressures and cheaper alternatives elsewhere, tempering their growth to a 13-month low. On a brighter note, exports provided a lifeline, with international orders surging at the quickest clip since August.
Manufacturers not only hired more staff but also boosted purchasing volumes to a four-month high. Suppliers delivered materials on time, extending a two-year trend of reliable performance that allowed firms to build inventories of raw and semi-finished goods. While inflation intensified, the PMI’s expansionary territory above 50 underscores India’s economic resilience heading into the year.