India?s manufacturing sector approached the end of the current fiscal year with a further pick-up in growth in February, according to the HSBC India PMI. Production rose at the fastest pace in five months, fueled the quickest increase in sales since last September and the strongest expansion in new export orders for 21 months.

An associated improvement in demand for raw materials meanwhile supported the rebuilding of input inventories, while supplier delivery times were broadly stable. Concurrently, purchasing cost inflation retreated to a 43-month low, with selling charges increasing to a lesser extent as a result.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers? Index (PMI) recovered further from December's 18-month low, rising from 56.5 in January to 56.9 in February. The latest reading pointed to the strongest improvement in the health of the sector since September 2023.

Production levels were raised in tandem with a further steep increase in inflows of new orders, besides advanced technology and buoyant demand conditions. Similarly, factory orders expanded at the quickest pace since September and one that was above the long-run series average.

Input costs meanwhile increased only fractionally, with the rate of inflation subsiding to the weakest in the current sequence of inflation that stretches back to August 2020.

Prices charged by Indian manufacturers increased at a slower rate, the joint-weakest since March 2023. Indeed, stocks of purchases rose at the fastest rate since last August as suppliers were comfortably able to deliver materials in a timely manner.

Finally, February survey data indicated sustained optimism among manufacturers regarding the year-ahead outlook for production.

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