India's Feb Business Activity Surges 7-Month High Amid Strong Demand

22 Feb, 2024

India's Feb Business Activity Surges 7-Month High Amid Strong Demand

Indian business activity surged in February, marking its fastest expansion in seven months, propelled by robust demand in both manufacturing and services sectors. This trend, highlighted in a recent business survey, underscores India's position as the fastest-growing major economy, poised for continued steady growth in the foreseeable future.

According to the HSBC's flash India Composite Purchasing Managers' Index (PMI), developed by S&P Global, February's index climbed to 61.5, surpassing January's reading of 61.2. This sustained expansion, now spanning 31 consecutive months, signifies a notable acceleration in output from both manufacturers and service providers, reaching a seven-month high.

Pranjul Bhandari, HSBC's chief India economist, emphasized the noteworthy increase in new export orders, particularly in the manufacturing sector, further buoying economic prospects. The flash manufacturing PMI soared to 56.7, its highest since September, while the services PMI reached a seven-month peak of 62.0, underscoring robust demand across sectors.

Driven by strong demand in the services industry, new orders across the private sector continued to rise briskly, with factory output hitting a five-month high. International orders also saw a notable uptick, fostering optimism among manufacturers for the year ahead, despite a slight dip in overall business confidence from the previous month's high.

However, employment levels stagnated for the first time since May 2022, signaling a potential challenge amidst the broader economic upswing. While services companies experienced stronger cost burdens compared to manufacturers, overall cost pressures moderated, allowing producers to mitigate output price increases and improve margins. This moderation, reflected in the flash data, indicates a more favourable operating environment for businesses, auguring well for sustained economic momentum.