Strong manufacturing growth further boosts India’s private sector in February: survey
The PMI rises to 59.3 due to robust total new orders that climb at the quickest pace since November
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[BENGALURU] India’s private sector accelerated in February, led by a robust demand for goods even as services growth was broadly steady, based on a survey that also showed intensifying inflationary pressures.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.3 in February from January’s 58.4 – the strongest in three months, and above a Reuters poll median forecast of 59.
The 50-mark separates expansion from contraction.
The improvement was supported by robust total new orders which rose at the quickest pace since November.
Businesses attributed their gains to strong demand, local tourism and marketing efforts. International sales also increased at the fastest pace in five months, bolstering the overall demand.
Goods producers reported a sharper rise in sales, pushing output growth to a four-month high. However, services firms’ growth in new business eased to a 13-month low, even as they outperformed manufacturers on export orders.
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While the preliminary headline reading for manufacturing PMI rose to 57.5 from 55.4, the services PMI was little changed at 58.4 against 58.5 in January.
Better sales supported hiring at a faster pace, and optimism about the year-ahead activity improved to its strongest in a year.
The survey also showed higher price pressures, with input costs rising at their fastest rate in 15 months and pushing overall output charge inflation to a six-month high.
Services firms faced the steepest rise in input price inflation in two-and-a-half years, while factory input price inflation remained unchanged from January.
That combination of solid growth and rising costs, especially for services, will keep the Reserve Bank of India cautious as retail inflation rose 2.75 per cent in February, after the statistics ministry updated the consumer price index basket and the base year to 2024.
The central bank is expected to hold its key policy rate at 5.25 per cent this year, based on a Reuters survey. REUTERS
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