India's manufacturing sector strengthened in February, driven mainly by strong domestic demand. New orders rose sharply, helping production grow at its fastest pace in four months. The HSBC India Manufacturing PMI increased to 56.9 from 55.4 in January, signaling solid improvement in overall business conditions.
Local demand remained the key growth driver, supported by marketing efforts and higher client requirements. Export orders continued to grow but at the slowest rate in 17 months, with gains mainly coming from Asia, Europe, the Middle East and the US.
To keep up with rising workloads, manufacturers increased purchases of raw materials, expanded inventories and hired more workers. Buying activity grew at a three-month high, while pre-production stocks rose sharply. Employment increased modestly but at the quickest rate in four months, supported by a rise in backlogged orders.
Cost pressures remained moderate, similar to January, despite higher spending on labour, materials and transport. However, companies raised selling prices at a faster pace to protect profit margins.
Supplier delivery times improved, indicating stable supply conditions. Looking ahead, businesses remain optimistic. Around 16% of firms expect higher output over the next year, supported by continued marketing efforts and healthy demand conditions.
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