India's manufacturing sector experienced its slowest growth in 14 months during February 2025, impacted by a softer increase in new orders and production, according to the latest HSBC India Manufacturing Purchasing Managers' Index (PMI) survey released on Monday.
The seasonally adjusted PMI dropped to 56.3 in February from January's robust reading of 57.7. Despite this decline, the index remained firmly in the 'expansionary' zone—any reading above 50 indicates growth, while below 50 suggests contraction.
Manufacturing Momentum Still Positive Despite Slower Growth
Commenting on the results, HSBC’s Chief India Economist Pranjul Bhandari stated, "Although output growth slowed to the weakest level since December 2023, overall momentum in India's manufacturing sector remained broadly positive in February."The February figures reflected a moderation from January's nearly 14-year peak, yet the pace of manufacturing growth remained robust. The survey highlighted strong new export orders as Indian manufacturers continued to benefit from sustained global demand.
Strong Export Demand Boosts Employment and Purchasing Activity
Driven by positive domestic and international market conditions, manufacturers increased both purchasing activities and workforce numbers. February’s hiring rate was notably high, recording the second-best performance in the history of the survey, trailing only January's record."One-in-ten firms signalled greater recruitment activity, while merely 1% reported job cuts," according to the survey findings.
Moreover, business sentiment remained exceptionally strong. Approximately one-third of surveyed manufacturers anticipated higher production volumes in the coming year, indicating sustained optimism.
Cost Inflation Eases Slightly, But Charges Remain High
The survey indicated that February saw the slowest rise in input costs over the past year. However, manufacturers maintained elevated prices for their products due to resilient demand conditions, signaling continued inflationary pressures on end consumers.Economic Growth Outlook and Manufacturing Sector Prospects
On the broader economic front, India’s GDP grew by 6.2% in the quarter ending December 2024, rebounding from a seven-quarter low. Despite this recovery, growth remained lower than the previous year's performance.For fiscal year 2024-25, the Indian government has projected a GDP growth rate of 6.5%, slightly above the previous estimate of 6.4%, but notably below the revised 9.2% growth rate registered in FY 2023-24.
Even with these moderated growth projections, India is expected to remain the fastest-expanding major economy globally.
