India’s Business Activity Soars: Fastest Expansion in 7 Months Driven by Manufacturing and Services Demand

In February, Indian business activity expanded at its fastest pace in seven months, driven by strong demand in both manufacturing and services.

The output of both manufacturers and service providers reached a seven-month high in February, with new export orders experiencing a significant rise.

HSBC’s flash India Composite Purchasing Managers’ Index (PMI) rose to 61.5, indicating expansion for the 31st consecutive month.

The manufacturing PMI for February reached 56.7, the highest since September, and the services PMI was at a seven-month high of 62.0.

New orders in the private sector continued to grow, driven by demand in the services industry, which expanded at its fastest pace since mid-2010.

Despite overall international orders increasing, business confidence slipped slightly from the previous month’s four-month high.

Optimism among manufacturers for the next 12 months was the highest since December 2022; however, employment didn’t increase, marking the first time since May 2022.

Although services companies faced stronger cost increases than manufacturers, the data showed a moderation in cost pressures, with overall input prices rising at the slowest pace in three-and-a-half years.

Producers were able to control output price increases and improve margins, likely providing comfort to the Reserve Bank of India, which is expected to maintain its key repo rate before a potential cut in the second quarter.