The average readings for both PMI Manufacturing and Services in the first two months of the current quarter is well above the average witnessed in the previous quarter, reflecting the continuing buoyancy of the Indian economy, said Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research. “While there has been a slowdown in the agricultural sector induced by the El Nino factor, both the manufacturing and the services have continued to display their resilience,” he said. Accordingly, the firm has revised upwards its forecasts for FY24 GVA and GDP to 6.9 per cent and 7.6 per cent respectively in line with that of NSO.
“We expect a slight moderation in the growth momentum print in FY25 but it will continue to remain strong with a GVA/GDP growth forecast at 6.4 per cent/ 6.7 per cent. The extent of pickup in private sector capital expenditure will have a significant bearing on the growth print over the medium term,” Suman Chowdhury added.
India’s manufacturing Purchasing Managers’ Index (PMI) for the month of February came in at 56.9 as compared to 56.5 in the previous month, up from December’s 18-month low of 54.9. According to the HSBC final India Manufacturing Purchasing Managers’ Index, compiled by S&P Global, India’s Services PMI rose to 62 from 61.8 on a month-on-month basis and composite PMI was at 61.5 vs 61.2 (MoM). India’s manufacturing industry enjoyed healthy growth in February led by improved global demand and lower inflationary pressures. The upswing in manufacturing output has been largely driven by the capital goods sector which augurs well for private sector investments in India, said Acuité Ratings & Research. Export orders rose at the fastest rate in nearly two years as per the survey respondents. While employment was largely at the same levels, purchasing activity rose the most in five months, and lead times on inputs were broadly stable. On the price front, input price inflation eased to the weakest since August 2020, while output cost inflation slowed to an eleven-month low. Finally, February survey data indicated sustained optimism among manufacturers regarding the year-ahead outlook for production. The overall level of confidence in the manufacturing sector was the second highest since December 2022.
Meanwhile, India’s services activity expanded at a robust pace in February, with the HSBC services Purchasing Managers’ Index (PMI) coming in at 60.6 during the month. The February print was, however, lower than 61.8 recorded during January. The index has remained below 60 for only four months in the Apr-Feb period. According to the survey, business activity increased across all parts of the services sector. Finance & Insurance saw the strongest pace of growth by a considerable margin, with the slowest rise registered in Real Estate & Business Services. New overseas orders to services firms in India rose for the thirteenth successive month. The latest PMI also showed the second-weakest cost pressures in the sector since August 2020 and the softest increase in selling charges for two years. Companies created jobs on the back of rising workloads, but the easing of capacity pressures and lower confidence towards the outlook dampened employment growth in the sector.