India's Private Sector Growth Hits Six-Month High in February: HSBC Flash PMI While manufacturing output also improved, the PMI report dipped slightly from 57.7 in January to 57.1 in February due to competitive pressures. However, the manufacturing index remained well above its long-run average of 54.1, indicating continued expansion.

India's private sector witnessed its fastest expansion in six months in February, driven by a surge in services activity and resilient manufacturing performance, as per the latest HSBC Flash Purchasing Managers' Index (PMI). The HSBC Flash India Composite Output Index climbed to 60.6 in February from 57.7 in January, signaling strong economic momentum.

The uptick was fueled by a sharp rise in new business orders and robust international demand, with export orders growing at their fastest pace in seven months. "Rapid restocking around the world continues to lift new export orders," said Pranjul Bhandari, Chief India Economist at HSBC. "A healthy acceleration in orders and output is keeping firms optimistic about the future."

Services sector leads growth

The services sector emerged as the primary growth driver, recording its steepest increase in activity in nearly a year. While manufacturing output also improved, the PMI report dipped slightly from 57.7 in January to 57.1 in February due to competitive pressures. However, the manufacturing index remained well above its long-run average of 54.1, indicating continued expansion.

Strong demand pushed operating capacities to their limits, leading to the sharpest accumulation of backlogs in over four years. This, in turn, prompted businesses to accelerate hiring, with job creation reaching a record high. "Survey members hired a combination of permanent and temporary workers on full- and part-time bases. In particular, there were several mentions of trainees being taken on," the report noted, highlighting the labor market's positive trajectory.

Cost and pricing trends showed mixed results. Input cost inflation moderated to a four-month low, with businesses citing stable labor and transportation costs. However, output prices for goods and services rose at their fastest rate in three months, helping firms improve profit margins, particularly in the manufacturing sector.

"Input prices eased while output prices rose at a faster pace, leading to improved margins, especially for goods producers," Bhandari added.

Business confidence improved to its highest level since November 2024, driven by stronger order books and expectations of sustained demand. Manufacturers, in particular, remained upbeat, leading to increased procurement of raw materials and a rise in input inventories. However, stocks of finished goods continued to decline, indicating steady consumption and production cycles.

With supplier delivery times improving for the twelfth consecutive month, Indian businesses appear well-positioned to capitalize on growing domestic and international demand.