India’s manufacturing sector growth fell to a 14-month low in February amid softer increase in new orders and production, a monthly survey said on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) registered 56.3 in February, down from 57.7 in January, but remained firmly within the ‘expansionary’ territory.

In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“Although output growth slowed to the weakest level since December 2023, overall momentum in India’s manufacturing sector remained broadly positive in February,” said Pranjul Bhandari, Chief India Economist at HSBC.

Although softer than January’s near 14-year high, the pace of expansion was sharp, the survey said, adding that new export orders rose strongly in February, as manufacturers continued to capitalise on robust global demand for their goods, the survey said.

Moreover, favourable domestic and international demand prompted firms to increase purchasing activity and hire extra workers.

“Business expectations also remained very strong, with nearly one-third of survey participants foreseeing greater output volumes in the year ahead,” Bhandari said.

On the job front, manufacturers continued to expand their workforce numbers in February. The rate of job creation was the second-best in the series’ history, behind only that recorded in January.

“One-in ten firms signalled greater recruitment activity, while 1 per cent of companies shed jobs,” the survey said.

According to the survey, February witnessed the slowest rise in cost burdens in a year, but demand buoyancy kept charge inflation at an elevated level.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

On the domestic macroeconomic front, the Indian economy grew by 6.2 per cent in the December quarter, recovering sequentially from seven-quarter lows, but the expansion came in lower than last year.

For the full 2024-25 fiscal (April 2024 to March 2025), the government now pegs GDP growth at 6.5 per cent, marginally higher than its initial estimate of 6.4 per cent but below the revised growth rate of 9.2 per cent for 2023-24.

The growth in the current fiscal and less than 7 per cent expected in the next will keep India as the fastest-expanding major economy. 

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