India's Manufacturing PMI Shows Steady Growth In February

The growth momentum in India's manufacturing sector was maintained in February, with new orders and output increasing at similar rates to January, according to a monthly survey. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) was at 55.3 in February, little-changed from 55.4 in January.

The February PMI data pointed to an improvement in overall operating conditions for the 20th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction. "India's manufacturing industry sustained robust growth of output and new orders halfway through the final fiscal quarter, albeit with a notable slowdown in the rate of international sales expansion," the survey released on Wednesday said.

Companies signalled only mild pressure on their own operating capacities, with outstanding business increasing marginally in February and accordingly job numbers expanded only fractionally. As per the survey, 98 per cent of panellists reported no change in employment. Job creation failed to gain meaningful traction as firms reportedly had sufficient staff to cope with current requirements, said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

The domestic market was the main source of new business growth, as new orders from abroad increased only fractionally. The rise in international sales was the weakest in the current 11-month period of expansion. "... most of the upturn in new orders welcomed by firms was domestically driven as international sales rose at a marginal pace that was the weakest in almost a year," Lima said.

On the prices front, input cost inflation accelerated to a four-month high, with firms mentioning higher prices for electronic components, energy, foodstuff, metals and textiles. "After slipping to a 26-month low last November, input cost inflation surged in every month since. The latest rise was historically subdued, however, and among the weakest in around two years.

"The survey showed some reluctance among manufacturers to pass on cost increase to clients, with output charge inflation easing since January," Lima said. Meanwhile, business confidence improved in February, with firms expecting demand strength, new product releases and investments to bode well for growth prospects.

The S&P Global India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.