India PMI Feb 2024: Manufacturing Sector Demonstrates Resilience Amidst Key Developments

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI) rebounded from December's 18-month low, rising from 56.5 in January to 56.9 in February. This latest reading marked the strongest improvement in the health of the sector since September 2023.A reading above 50 is considered a sign of expansion and a reading below of 50 is a sign of contraction.

Key Changes Observed:

Production Surge: Production levels surged, marking the quickest pace of growth in five months. This upturn was particularly driven by increased adoption of advanced technology and favorable demand conditions, with the capital goods category leading the way.

Sales Momentum: Sales saw a remarkable increase, signaling a shift towards stronger demand conditions. Enhanced marketing efforts translated into expanded factory orders, indicating a favorable response from consumers.

Export Expansion: New export orders experienced a sharp uptick, reaching the highest rate of growth in nearly two years. Demand emanated from diverse markets including Australia, Bangladesh, Brazil, Canada, China, Europe, Indonesia, the US, and UAE.

Cost Dynamics: Input costs witnessed fractional increases, resulting in the weakest inflation rate since August 2020. Notably, there were fluctuations in prices, with certain commodities such as iron, paper, and plastics experiencing higher costs while others like cotton and steel saw reductions.

Purchasing Activity: Manufacturers significantly ramped up purchasing activity to meet burgeoning production needs and to buffer safety stocks. This surge resulted in the fastest growth in buying levels since September 2023.

Stable Supplier Delivery Times: Despite heightened purchasing activity, supplier delivery times remained stable, ensuring consistent and timely material deliveries.

​Employment and Capacity: Employment levels in manufacturing remained largely stable, indicating sufficient workforce for current operations. Capacity pressures remained mild, with a slight uptick in work pending completion compared to previous periods.

Optimism Levels: Manufacturers expressed sustained optimism regarding future production prospects, marking the second-highest level of confidence since December 2022.

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The February HSBC India PMI® data revealed significant changes in the manufacturing landscape, characterized by increased production, sales, and export orders. Despite challenges such as fluctuating input costs, the sector remains resilient and adaptable, with manufacturers expressing confidence in future growth prospects. These developments highlight the sector's ability to navigate evolving market dynamics effectively.

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