Manufacturing slows: February hits 14-month low at 56.3

India’s manufacturing activity slowed in February, hitting a 14-month low of 56.3 from 57.7 in January, HSBC’s survey revealed. New orders and production lost momentum, though the sector remained in expansion mode.

HSBC’s Pranjul Bhandari noted that while new export orders increased, demand softened compared to January. Job expansion also slowed, with only 10% of firms hiring and 1% cutting jobs. Rising input costs pressured producers, who passed them on to consumers due to strong demand.

Despite the slowdown, business optimism stayed high, with firms expecting demand to drive growth. India’s economic recovery remained strong, with GDP growth rebounding to 6.2% in Q3 from 5.6% in the previous quarter. The government revised its growth estimate to 6.5% from 6.4%.

However, manufacturing continues to lag. Growth in the sector is expected to drop to 4.3% from 12.3% in the previous fiscal year. Its share of GDP fell to 15.7%, below the 16% average seen over the last 15 years.