India's manufacturing growth slows to 14-month low in February, PMI at 56.3

India's manufacturing sector lost some momentum in February, with growth slowing to a 14-month low amid softer expansion in new orders and production, according to a monthly survey released on Monday.

The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 56.3 in February from 57.7 in January. Despite the drop, the index remained well above the 50-mark, indicating continued expansion.

"Although output growth slowed to the weakest level since December 2023, overall momentum in India's manufacturing sector remained broadly positive in February," said Pranjul Bhandari, Chief India Economist at HSBC.

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While the growth pace softened from January’s near 14-year high, new export orders remained strong, reflecting robust global demand for Indian goods. Favourable domestic and international conditions also encouraged firms to expand purchasing activity.

Hiring gains as firms stay optimistic

Despite the slowdown, manufacturing companies continued to increase their workforce. The rate of job creation in February was the second highest in the survey's history, following January's record peak.

One in ten firms signalled greater recruitment activity, while only 1 per cent reported job cuts, the survey added. Business confidence also remained high, with nearly a third of survey respondents expecting output to rise over the next year.

Meanwhile, cost burdens in February rose at their slowest pace in a year, but strong demand kept selling prices elevated. On the broader economic front, India’s GDP grew 6.2 per cent in the December quarter. The government has pegged full-year growth for 2024-25 at 6.5 per cent, keeping India the fastest-growing major economy.