India’s manufacturing sector surged in February, marking its most robust growth in five months amidst subdued cost pressures. The HSBC final India Manufacturing Purchasing Manager’s Index (PMI), compiled by S&P Global, exceeded expectations by rising to 56.8 from January’s 56.5, surpassing the preliminary estimate of 56.7.
For 32 consecutive months, manufacturing PMI in India has been above 50 points, indicating steady growth. The nation’s economy, which is the fastest-growing major economy in the world and the third-largest in Asia, grew by 8.4% during the October–December quarter.
Ines Lam, an economist at HSBC, emphasised that both domestic and foreign demand were responsible for the increased output. Demand from several nations, including Australia, China, US, and UAE, boosted demand globally, with expansion reaching a nearly two-year high.
Even with a cautious perspective for the future, companies declined to add new workers, arguing that their current workforce levels were sufficient. Companies began stockpiling raw materials in anticipation of future demand as a result of cost pressures that had increased slowly since mid-2020.
As long as GDP is strong and inflation stays within the target range of 2–6%, the Reserve Bank of India is expected to keep interest rates where they are until at least July, even if inflationary pressures have eased.
