India's Manufacturing PMI Declines to 14-Month Low of 56.3 in February

In February, India's manufacturing sector experienced a decline, reaching a 14-month low, as the HSBC India Manufacturing Purchasing Managers' Index (PMI) fell to 56.3 from 57.7 in January. The decrease, influenced by weaker new orders and production expansion, was emphasized in a private sector report published on March 3.

Despite the dip, the PMI remained in expansionary territory. "India recorded a 56.3 manufacturing PMI in February, down slightly from 57.7 during the prior month, but still firmly within expansionary territory," said Pranjul Bhandari, chief India economist at HSBC.

The most recent figure also dropped beneath last quarter's average of 56.8. Although export orders increased, demand weakened in comparison to January. Job growth in the sector decelerated, as merely 10% of companies indicated increased hiring, while 1% cut their workforce.

Producers encountered increasing input expenses but managed to transfer them to customers because of strong demand. However, the overall outlook remained positive, with firms expecting demand to drive growth in the coming year.

The production decline occurs even with India's overall economic recovery. GDP growth bounced back to 6.2% in the third quarter, rising from a nearly two-year low of 5.6% recorded in the prior quarter. The government has updated its annual growth projection to 6.5%, an increase from 6.4%.

However, manufacturing is anticipated to stay weak, as growth is estimated to decrease to 4.3% in FY24 from 12.3% in the prior fiscal year. The sector's portion of GDP fell to 15.7%, lower than its 16% average from the last 15 years.