February manufacturing growth remains flat: Purchasing Managers` Index
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India's manufacturing sector growth remained flat-to-positive in February, as improving business environment pushed order flow.
Accordingly, the headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 57.5 (index reading) in February easing a bit from 57.7 in January.
However, the index remained above its long-run average of 53.6.
The PMI ranges between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month.
"Better demand conditions and successful marketing campaigns reportedly underpinned a further increase in new orders during February," said IHS Markit in the February PMI report.
"Although easing from January, the pace of growth remained sharp in the context of historical data."
Besides, new export orders rose halfway through the final quarter of fiscal year 2020-21, albeit at a modest rate that was softer than in January.
According to panel members, the Covid-19 pandemic restricted international demand for Indian goods.
"In response to another robust increase in total new orders, production was raised again in February. The pace of expansion eased from January, but was nevertheless sharp and among the quickest seen over the past nine years."
"February data pointed to the strongest increase in input inventories in the survey history as firms reacted to rising production needs by lifting purchasing activity. The expansion in input buying was the fastest in almost a decade."
Furthermore, survey members noted greater prices for a number of items such as chemicals, metals, plastics and textiles.
As per the report, the overall rate of cost inflation hit a 32-month high.
Although factory gate charges also increased in February, the rate of inflation was modest and eased from January's 13-month high.
"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. Still, the data indicated that production growth could have been stronger should firms have appropriate resources to handle their workloads," said Pollyanna De Lima, Economics Associate Director at IHS Markit.
"This was evident from a quicker rise in outstanding business and another decline in inventories of finished goods. Some companies indicated that capacity expansion through hiring was not currently possible due to existing restrictions on labour working hours."
