Manufacturing PMI for February: According to the private sector survey released on March 3, India's manufacturing activity fell to 56.3 in February, which is the lowest level in 14 months. Whereas last month it was at 57.7. There has been a slight decline in new orders and production during this period. HSBC India Manufacturing Purchasing Managers Index has gone down from the average of 56.8 of the previous quarter.
Pranjul Bhandari, chief economist, India, HSBC, said, "India recorded a manufacturing PMI of 56.3 in February, slightly lower than the previous month's 57.7, but still in expansionary territory."
Let us tell you that a figure above 50 indicates expansion in manufacturing activities. Whereas, a figure below 50 indicates a decline in manufacturing activities.
Although companies have registered an increase in new export orders in February, demand has been less compared to January. Apart from this, employment growth has also been less compared to the previous month. HSBC said, one in ten companies has indicated an increase in recruitment. While one percent of companies have reduced jobs.
Producers have also faced pressure from rising input costs. However, due to strong demand, they have been able to pass on the cost burden to consumers. The decline in production activity has not had a significant negative impact on the prospects. The future outlook remains good and companies are banking on strong demand to drive growth in the coming years.
Despite the improvement in the country's economic performance, the growth rate of the manufacturing sector remains slow. India's growth rate reached 6.2 percent in the third quarter. It has recovered from the two-year low of 5.6 percent in the previous quarter. The government expects the growth rate to increase to 6.5 percent from the earlier estimate of 6.4 percent. However, the growth of the manufacturing sector is likely to remain weak. It may fall to 4.3 percent from 12.3 percent in the last financial year.
The manufacturing sector as a share of GDP has again declined to 15.7 percent from an average of 16 percent over the last decade and a half.
