India’s manufacturing sector picked up in February on the back of “strong growth in domestic orders” and “international demand”, according to the HSBC’s PMI survey.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) — a measure of factory production — stood at 54.2 in February, after slowing to a three-month low level of 53.2 in January. It stood at 54.7 in December.
The rise appears mainly due to finished goods inventory restocking, which has lifted output and domestic new orders, analysts said.
Export orders moderated in February, indicating that global demand remains weak. “The forward-looking new order/inventory ratio has fallen to 1.10 from 1.16 in January, suggesting some weakness ahead.
Worryingly, the output price index — which has a good correlation with core WPI inflation with a lag - rose to a six-month high of 57.9 in February from 55 in January, suggesting that core inflation may start to pick up in the coming months,” said a Nomura note.