India’s manufacturing PMI hits 4-month high in February, export growth slows to 17-month low

India’s manufacturing activity expanded at its fastest pace in four months in February, powered by robust domestic demand, even as export growth slowed to a 17-month low, a monthly survey showed on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to a four-month high of 56.9 in February from 55.4 in January, marking its highest reading since October.

The PMI is based on responses from purchasing managers in a panel of manufacturing firms and is considered a key indicator of business conditions. A reading above 50 indicates expansion, while below 50 signals contraction.

The upturn was driven primarily by a substantial improvement in domestic orders, which lifted overall new business growth to its strongest level since October.

Companies said the upturn in total sales was largely underpinned by the domestic market.

Output growth also accelerated to a four-month high and remained above its long-run average, supported by efficiency gains, healthy demand and technology investments.

However, the survey pointed to a moderation in overseas demand.

New export orders expanded at the slowest pace in 17 months, with growth broadly converging towards its long-run average.

“India’s final manufacturing PMI reflected an acceleration in manufacturing activity in February,” said Pranjul Bhandari, Chief India Economist at HSBC.

“Output expanded at a faster rate for a second month, supported by stronger domestic orders. However, growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector,” she added.

Manufacturers ramped up production at the quickest pace in four months, aided by efficiency gains, healthy demand, higher new work inflows and technology investment.

Pre-production stocks increased sharply, well above their long-run trend.

Employment rose for the fourth consecutive month and at the quickest pace in four months.

Survey participants indicated that rising backlogs of work, which grew at a seven-month high, supported additional hiring.

On the price front, input cost inflation remained moderate and unchanged from January.

However, output price inflation accelerated and exceeded its historical average as firms sought to protect margins amid higher spending on labour, materials and transport.

“Year-ahead assessments of output volumes remained positive as 16% of companies forecast growth and fewer than 1% anticipate a reduction,” the report said.

“Boding well to the outlook were marketing efforts and favourable demand conditions, qualitative survey data showed,” it added.