India's Business Activity Surges To 7-Month High In February On Robust Demand

The manufacturing PMI for February rose to 56.7 from the previous month's 56.5, while services PMI climbed to 61.5 this month, surpassing January's final reading of 61.2

Driven by demand in the dominant services industry, new orders across the private sector continued to rise robustly, while factory output accelerated to a five-month high. ( Image Source :Getty )

Indian business activity experienced a notable surge in February, marking its most rapid expansion in seven months, fuelled by robust demand in both manufacturing and services sectors, according to a recent business survey released on Thursday. The report, which also indicated a moderation in price pressures, aligns with the projections from a Reuters poll, underscoring India's position as the fastest-growing major economy poised for continued steady growth in the upcoming years.

The HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 61.5 this month, surpassing January's final reading of 61.2. This marks the 31st consecutive month the index has remained above the 50-mark threshold, signifying expansion rather than contraction.

Pranjul Bhandari, chief India economist at HSBC, said, "The pace of acceleration in the output of India's manufacturers and service providers, combined, was at a 7-month high in February. Encouragingly, new export orders rose sharply, particularly for goods producers."

The manufacturing PMI for February rose to 56.7 from the previous month's 56.5, hitting its highest level since September. Simultaneously, the preliminary services PMI reached a seven-month peak of 62.0, up from 61.8 in January.

Driven by demand in the dominant services industry, new orders across the private sector continued to rise robustly, while factory output accelerated to a five-month high. Global orders also saw a notable increase, reaching the quickest pace since September.

Despite the overall optimistic outlook for the next 12 months, business confidence slightly dipped from January's four-month high. Moreover, employment failed to register an increase for the first time since May 2022.

While services companies noted a more pronounced increase in cost burdens compared to manufacturers, there was a moderation in cost pressures overall. Input prices rose at the slowest pace in three-and-a-half years, allowing producers to improve margins. This trend is likely to provide reassurance to the Reserve Bank of India, which is anticipated to maintain its key repo rate unchanged before a potential first cut in the July-September quarter.