India's manufacturing activity expanded at its fastest pace in four months in February due to strong domestic demand, but export growth cooled to its slowest rate in nearly a year-and-a-half.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 56.9 in February from January's 55.4, but undershot a preliminary estimate of 57.5.
A PMI above 50 signals expansion, with output expanding at a faster rate for a second month, supported by stronger domestic orders.
However, growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector.
The overall result suggests India's economy is expected to remain resilient this quarter after growing at 7.8% in October-December, helped by a 13.3% rise in manufacturing.
For the fiscal ending in March 2026, the South Asian economy is expected to grow 7.6%.
New export orders grew at the slowest pace in 17 months, suggesting US tariff uncertainty remains despite a recent trade deal with India.
Input cost inflation remained moderate and unchanged from January, but manufacturers raised their selling prices at the fastest rate in four months as strong demand allowed them to pass on increased costs.
Employment increased to a four-month high but only marginally, with just 4% of firms reporting hiring while most made no staffing changes.
Confidence about the year ahead improved to a four-month high, indicating a robust economic growth outlook despite poor external demand.
