India’s Manufacturing Growth Slows to 14-Month Low in February
India’s manufacturing sector experienced a slowdown in February 2025, with the Purchasing Managers’ Index (PMI) dropping to 56.3 from January’s 57.7, marking a 14-month low. This decline is attributed to cooling demand, both domestically and internationally, leading to softer increases in new orders and production.
Cooling Demand Impacts Factory Activity
The HSBC India Manufacturing PMI, compiled by S&P Global, registered a reading of 56.3 in February, down from 57.7 in January. This marks the lowest PMI since December 2023, indicating a slowdown in manufacturing activity due to cooling demand. Despite the decline, the PMI has remained above the 50-point mark for 44 consecutive months, signaling continuous expansion in the sector.
Employment Growth Remains Robust
Despite the slowdown in manufacturing activity, employment generation rose at a healthy pace in February. Firms increased their workforce numbers, reflecting ongoing optimism about future output and demand. This robust employment growth suggests that companies are preparing for a potential rebound in demand in the coming months.
Inflationary Pressures Ease
The survey also indicated that inflation eased in February, providing some relief to manufacturers. Input costs rose at the slowest pace in 12 months, allowing firms to moderate their output price increases. This easing of inflationary pressures could support consumer demand and help sustain economic growth in the near term.
Outlook Remains Optimistic
Despite the slowdown, the overall momentum in India’s manufacturing sector remained broadly positive in February. Business expectations remained strong, with nearly one-third of survey participants foreseeing greater output volumes in the year ahead. This optimism is underpinned by robust global demand, which continues to boost growth in the Indian manufacturing sector.
In summary, while India’s manufacturing growth slowed to a 14-month low in February due to cooling demand, the sector continues to expand, supported by robust employment growth and easing inflation. The positive business outlook suggests that manufacturers remain optimistic about future growth prospects.
