India's Manufacturing Purchasing Managers’ Index (PMI) fell to 56.3 in February 2025 from 57.7 in January, marking the slowest expansion since December 2023. The decline was driven by weaker growth in output and sales, along with a slowdown in input purchasing to a 14-month low.

       The PMI figure was compiled by S&P Global and released by HSBC. Although demand remained strong, inflationary pressures persisted, with firms passing higher labour costs to clients.

       Pranjul Bhandari, chief India economist at HSBC, said: "India recorded a 56.3 manufacturing PMI in February, down slightly from 57.7 during the prior month, but still firmly within expansionary territory. Robust global demand continued to boost growth in the Indian manufacturing sector, which increased its purchasing activity and employment. Business expectations also remained very strong, with nearly one-third of survey participants foreseeing greater output volumes in the year ahead. Although output growth slowed to the weakest level since December 2023, overall momentum in India’s manufacturing sector remained broadly positive in February."

       February data showed a 44th consecutive rise in new business intakes, which panel members linked to strong client demand and efforts to price better than their competitors. The overall pace of growth receded to the slowest since December 2023, but was above its long-run average.

       Despite the dip, the sector maintained expansionary momentum, supported by strong domestic and global demand. The overall outlook remained optimistic, with manufacturers expecting continued growth in the coming months.

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       In January, the manufacturing PMI stood at 57.7, recovering sharply from 12-month low of 56.4 in the previous month. This rise was fuelled by the steepest upturn in exports in nearly 14 years and by new orders which rose at the quickest pace since last July.

       What is Manufacturing PMI?

       Manufacturing PMI data is an economic indicator that measures the activity level in the manufacturing sector. It is based on a survey of purchasing managers across manufacturing industries and provides insights into business conditions, including production, new orders, employment, supplier delivery times, and inventory levels.

       This data is closely watched as an early indicator of economic health, helping businesses, policymakers, and investors gauge trends in the manufacturing industry and overall economy.

       GDP upturn

       India's gross domestic product (GDP) grew by 6.2 per cent in the October-December quarter of financial year 2024-25 (Q3 FY25), an increase from the previous quarter's 5.6 per cent growth. The rise comes after GDP growth fell to a seven-quarter low of 5.4 per cent in Q2 FY25, significantly below estimates. This uptick was primarily driven by heightened government and consumer spending, bolstered by a robust Kharif crop output and a revival in rural demand.

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