The Aryavarth Express
Agency(Bengaluru): Indian business activity witnessed a significant expansion in February, recording its fastest growth in seven months. This surge was driven by strong demand in both manufacturing and service sectors, as indicated by a recent business survey. Additionally, the survey pointed to a reduction in price pressures.
The findings align with a Reuters poll, which predicts steady growth for India, currently the fastest growing major economy, over the upcoming years. According to the HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, the index rose to 61.5 this month from January’s final reading of 61.2. This marks the 31st consecutive month of the index staying above the 50-mark, distinguishing expansion from contraction.
Pranjul Bhandari, the chief India economist at HSBC, noted that both manufacturing and service sectors saw an accelerated output pace, reaching a seven-month high in February. Particularly noteworthy was the sharp rise in new export orders, especially for goods producers.
The flash manufacturing PMI for February climbed to 56.7 from 56.5 in the previous month, hitting its highest point since September. Similarly, the preliminary services PMI reached a seven-month peak of 62.0, up from 61.8 in January. New orders across the private sector continued to increase robustly, driven primarily by the dominant services industry, which expanded at its fastest rate since mid-2010. Factory output also accelerated, reaching a five-month high.
Overall international orders increased at the fastest pace since September, boosting optimism among manufacturers for the next 12 months. This optimism reached its highest level since December 2022. However, overall business confidence saw a slight decline from January’s four-month high.
One area of concern was employment, which did not increase for the first time since May 2022. Despite this, the survey revealed a moderation in cost pressures. Services companies reported a stronger increase in cost burdens than manufacturers, but overall, input prices rose at the weakest pace in three-and-a-half years. This trend of producers being able to lower the rate of increase in output prices while improving margins could provide relief to the Reserve Bank of India, which is expected to maintain its key repo rate unchanged before considering a cut in the July-September quarter.