India Manufacturing PMI picks up in February

A gauge of activity across India’s manufacturing sector expanded on a faster pick-up in new business inflows.

The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 54.9 in February against 54 in January, according to a monthly press release. A reading above 50 indicates economic expansion.

The gauge has signaled expansion in each of the latest eight months, with the headline figure remaining above its long-run average of 53.6.

Anecdotal evidence pointed to supportive demand conditions and higher sales to both new and existing clients, the release said. Demand from international clients also rose at the quickest pace in three months.

Production rose for the eighth successive month and the pace improved from that in January. New orders and output increased across each of the three broad areas of the manufacturing sector. Rates of expansion picked up for intermediate and capital goods firms but eased for consumer goods makers, though it remained the best-performing sector in February for the third month in a row.

Despite a pickup in demand, employment fell, though at a fractional pace.

Greater purchasing activity and expectations of higher output in the months ahead led to a “solid rate” of pre-production inventory growth. Stocks of finished goods fell. But with pandemic restrictions and supply issues persisting, delivery times lengthened again.

February’s survey showed a further increase in average input costs faced by Indian manufacturers. Purchase price inflation was sharp, but softened to a six-month low. Part of this additional cost burden was passed on in the form of higher selling charges, though the rate of increase was modest.

Business sentiment improved sharply, led by expansion plans, a return to normality and hopes for fruitful marketing. The degree of optimism, however, remained below its long-run average.

CT Bureau