India’s Manufacturing Growth Slows to 14-Month Low in February but Remains Strong

India’s manufacturing industry saw a slight slowdown in February 2025, with the HSBC India Manufacturing PMI dropping to 56.3 from 57.7 in January, according to S&P Global. This marks the weakest growth in 14 months, indicating a moderation in new orders and production. However, the sector remains in expansion mode, reflecting continued resilience.

Growth Across Key Sectors

Despite the slowdown, all three major manufacturing segments—consumer goods, intermediate goods, and investment goods—continued to expand. While output and sales grew at their slowest pace since December 2023, the sector’s overall performance remained strong compared to historical trends over the past 20 years. Stable domestic and international demand encouraged companies to increase purchases and expand their workforce.

Demand, Orders, and Job Growth

February marked the 44th straight month of growth in new business orders, driven by strong customer demand and competitive pricing strategies. Although the pace of growth eased to a 14-month low, it remained above the long-term average. Export orders also grew steadily, benefiting from strong global demand for Indian products.

To keep up with rising orders, manufacturers continued hiring at a strong pace. The job creation rate in February was the second highest ever recorded in the survey’s history, just behind January’s near 14-year peak. About one in ten companies reported increasing their workforce, while only 1% reduced staff.

Inflation and Rising Costs

Manufacturers faced higher input costs in February, particularly for items like bamboo, leather, rubber, marketing, and telecom services. However, the rate of cost inflation eased for the third straight month, reaching its lowest level in a year. Despite this, companies passed some labor costs onto customers, keeping selling prices above the long-term average.

Inventory and Future Outlook

Pre-production inventories grew significantly, supported by improved supplier delivery times for the 12th consecutive month. However, unfinished business also increased, with the backlog of work reaching its highest level since January 2024. Looking ahead, manufacturers remain optimistic about strong client demand sustaining production and growth in the coming months.

Conclusion

While February’s manufacturing growth slowed to a 14-month low, the sector continues to show resilience. With steady demand, increased hiring, and a positive outlook, manufacturers appear well-positioned to manage rising costs and maintain growth in the months ahead.