India’s Manufacturing Growth Remains Strong Despite Slight Slowdown in February

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March 2025 : The Indian manufacturing sector's strong start to 2025 continued in February. Despite slowing to the weakest since December 2023, rates of expansion in output and sales remained elevated in the context of the survey's 20-year history. Favourable domestic and international demand prompted firms to increase purchasing activity and hire extra workers at above-trend rates. However, demand buoyancy kept charge inflation at an elevated level despite softer cost pressures.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI®) registered 56.3 in February, down from 57.7 in January but still indicative of a further robust improvement in the health of the sector. Business conditions improved across all three monitored sub-sectors: consumer, intermediate and investment goods.

The overall pace of growth receded to the slowest since December 2023, but was above its long-run average.

New export orders rose strongly in February, as manufacturers continued to capitalise on robust global demand for their goods.

In response to the upturn in new orders, manufacturers continued to expand their workforce numbers in February, extending the current period of employment growth to a year.

Manufacturers again ramped up purchasing activities, but the pace of expansion eased to a 14-month low.

Indian manufacturers faced another rise in input costs. However, the overall rate of inflation eased for the third straight month to its weakest in a year.

Firms expressed strong optimism about growth prospects for the coming year, with client demand expected to remain positive and support output.

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