India's manufacturing industry maintained its strong run into 2025, though the rate of growth slowed marginally in February from January. India reported a PMI of 56.3 in February, a fall from 57.7 in January, as per the HSBC Manufacturing Purchasing Manager's Index (PMI) survey.
While this marginal dip means that the PMI still firmly lies in expansionary ground, it does show that growth is slowing down.
The survey noted some of the key positive factors for the industry's growth, such as robust domestic and overseas demand, prompting companies to boost buying activity and hire employees at higher-than-average levels. While cost pressures eased, the high demand maintained inflation in charges at high levels.
HSBC Chief India Economist Pranjul Bhandari reinforced that overseas demand still played an important role in pushing up manufacturing growth in India, as purchasing and jobs both picked up subsequently. The prospects of doing business over the coming year continued to be strong with close to one-third of survey respondents foreseeing increased volume of output.
The manufacturing sector saw improvements across all sub-sectors: consumer, intermediate, and investment goods. Output rose for the 44th consecutive month, extending the current growth streak, although the rate of expansion eased to its weakest since December 2023. Demand improvements, technology investments, and new projects contributed to this sustained growth.
The rate of new business inflow kept increasing, registering the 44th straight increase, underpinned by favorable client demand and competitive pricing. Export orders were also firming up, albeit the growth rate eased from the near 14-year high in January.
To meet the rising demand, producers continued to build their workforce, with job creation hitting the second-highest level in the survey's history. Firms also increased purchasing activity, albeit at a decelerating rate, with most firms replenishing inventories and making sure they are ready for possible input shortages. Pre-production inventories increased, and average lead times continued to be better.
On balance, while manufacturing growth weakened somewhat in February, it is still robust and well in excess of its long-term trend, with continued growth forecast for the next year.
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