India February Manufacturing PMI Slips Slightly to 57.5; Activity Shoots up for 7th Straight Month

India’s manufacturing activity slips marginally in February. However, it stayed above the long-run average as firms raised input inventories at a record pace. It also registered strong growth in sales and production, a private survey said.

As tracked by the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI), the activity declined marginally to 57.5 in February from 57.7 in January 2021. However, the headline figure remained above the long-run average of 53.6.

Driven by sharp rise in new business orders amid a rebound in demand conditions led to the rise in production and hiring activity.

Strong demand for raw materials and semi-finished items alongside supply chain disruption due to COVID-19 restrictions, pushed cost inflation to its highest since mid-2018.

A PMI reading above 50 denotes an expansion in manufacturing activity.

“Indian goods producers reported a healthy inflow of new orders in February, a situation that underpinned a further upturn in output and quantity of purchases,” noted Pollyanna De Lima, economics associate director at IHS Markit.

“The upbeat mood supported the fastest increase in input buying for almost a decade as companies focused on rebuilding their input stocks to fulfill demand growth. February data showed the sharpest monthly rise in pre-production inventories in the survey history,” she added.