Manufacturing growth strong in February despite weak export front: S&P Global PMI

Job growth faltered, but business confidence improved last month

Despite robust growth in new orders, job creation in the manufacturing sector, which had hit the slowest pace in January since September 2022 as per the PMI, dropped further to grow only fractionally in February. Image for representation. | Photo Credit: Reuters

In February, India’s manufacturing sector clocked the 20^th successive month of output growth and new orders, most of which was driven by the domestic market as growth in export orders hit an 11-month low, as per the Survey-based seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI). 

The Index was at 55.3 in February, fractionally below the 55.4 in January. A reading of over 50 on the index indicates growth in activity. 

Input costs surged at the fastest pace in four months in February, with firms mentioning higher prices for electronic components, energy, foodstuff, metals and textiles. However, 94% of producers opted to absorb the higher costs rather than pass them on to buyers, and overall output charges rose at the slowest rate in three months. 

Despite robust growth in new orders, job creation in the manufacturing sector, which had hit the slowest pace in January since September 2022 as per the PMI, dropped further to grow only fractionally in February.   

“Companies signalled only mild pressure on their own operating capacities, with outstanding business increasing marginally in February. As a result, there was little-change to overall job numbers. Indeed, 98% of panellists reported no change in employment,” S&P Global said. 

“Job creation failed to gain meaningful traction, however, as firms reportedly had sufficient staff to cope with current requirements. Indeed, there was only a marginal increase in their backlogs. Suppliers also appeared to have ample capacity to accommodate for rising input demand, shown by a stabilisation in delivery times,” explained Pollyanna De Lima, economics associate director at S&P Global Market Intelligence. 

Business confidence improved in February, with firms expecting demand strength, new product releases and investments to bode well for growth prospects, as per the PMI. 

“The PMI results suggested that most of the upturn in new orders welcomed by firms was domestically driven as international sales rose at a marginal pace that was the weakest in almost a year,” Ms. De Lima pointed out. She also noted that companies were confident of demand staying resilient as they continued to add to their inventories by purchasing additional inputs.