India's Manufacturing Growth Slows but Remains Resilient in February

By siliconindia  |  Monday, 03 March 2025, 02:24:43 PM IST

India’'s Manufacturing Growth Slows but Remains Resilient in February
India's manufacturing industry remained strong in February 2025, though down from the previous month. The industry had a PMI of 56.3, compared with January's 57.7, but still well in the expansionary region, based on the HSBC Manufacturing Purchasing Manager's Index (PMI) survey.
Positive domestic and global demand encouraged companies to raise purchasing activity and hire more workers at rates higher than trends. "Strong global demand continued to drive growth in the Indian manufacturing sector, which raised its purchasing activity and employment", stated Pranjul Bhandari, HSBC's Chief India Economist. She added that almost one-third of the companies surveyed expect higher output volumes in the next year.
Business conditions strengthened in consumer, intermediate, and investment goods industries. Output growth was extended to 44 months consecutively, though it slowed to the lowest since December 2023. The continued expansion was attributed to manufacturers by sustained demand, technology spending, and new project initiations.
New business intakes increased for the 44th consecutive month, with companies attributing expansion to solid client demand and competitive pricing policies. Although the growth rate softened to its weakest since December 2023, it was still stronger than the long-term trend. Export orders also advanced strongly, though at a slower rate than January's near 14-year high, as Indian manufacturers continued to benefit from overseas demand.
The rebound in new orders caused manufacturers to add staff numbers for the 12th straight month. The pace of job creation was second-highest in history, behind only January's record. About 10% of companies said they were raising hiring activity, while only 1% cut headcounts.
Buying activity was firm, while expansion eased to a 14-month low. Companies reported favorable client demand as an incentive for replenishing inventories and protection against possible shortages of inputs. As a result, pre-production inventories increased sharply for a further month, bolstered by better supplier delivery terms for the 12th consecutive month.
While helping to ease cost pressures, high demand sustained output charge inflation. However, business sentiment was upbeat, with manufacturers hopeful of future growth.
The HSBC report points to the resilience of the sector in the face of moderating growth, indicating that India's manufacturing sector is well-positioned for the continued expansion based on firm demand, workforce expansion, and strategic investment.
As Indian manufacturers play catch-up with changing global dynamics, their flexibility and sustained momentum indicate a good outlook for the months ahead.

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