India Manufacturing Growth Hits Four-Month High In February – What’s The Latest Data?

India’s manufacturing sector accelerated in February to its strongest pace in four months, signalling continued resilience in factory activity as domestic demand surged, according to the latest Purchasing Managers’ Index (PMI) data. The seasonally adjusted HSBC India Manufacturing PMI rose to 56.9 in February from 55.4 in January.

Thus, it remained well above the 50-point threshold that distinguishes expansion from contraction. But what are the underlying drivers and sector trends seen in the data?

What Drove The PMI Higher In February?

• The firms reported local consumption and marketing-led order wins. Thus, strengthening the domestic demand with new orders rising at the fastest pace since October 2025.

• Purchases of inputs and stock building accelerated. Along with input buying expanding at the fastest pace in three months, as companies sought to match rising order books and maintain production momentum.

• Employment in factories expanded modestly, recording the quickest job creation in four months as firms sought additional labour to cope with elevated workloads.

What Are Other Indicators Saying About Domestic Strength?

While domestic markets powered much of the February PMI strength, growth in export orders remained subdued, expanding at the slowest pace in around 17 months. Business surveys showed that although overseas demand from some regions such as Asia, Europe, the Middle East and the US did increase, the overall pace of export new work lagged behind domestic growth.

This divergence had several implications:

• Because exports slowed, hiring remained moderate. Weaker overseas demand meant companies did not feel the need to recruit beyond what domestic demand required.

• Some companies said freight and supply chain delays limited export growth, even though overall delivery times improved.

• Businesses also pointed out that uncertainty around global trade rules and tariffs has hurt export sentiment, despite recent tariff changes with key trade partners.

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What Does This Mean For India’s Wider Economy?

Here are the key implications:

• Strong domestic demand shows that consumers and businesses are still spending well. This can help maintain industrial growth before the new financial year begins on April 1.

• Moderate inflation in manufacturing may keep input costs under control.

• Weak export growth needs close attention. Especially, as global trade changes and geopolitical tensions may reduce overseas demand.

Sources:

Fortune India

Trading Economics