February saw the continuation of the robust start to 2025 for the Indian manufacturing sector. According to the HSBC survey issued on Monday, rates of production, employment, and sales increase were high relative to the long-run average, even if they slowed to their lowest since December 2023.

Businesses increased their buying activities and hired more employees at above-trend rates due to favorable local and foreign demand. Despite less severe cost constraints, demand buoyancy maintained charge inflation at a high level, according to the HSBC Manufacturing Purchase Manager’s Index study.

“India’s manufacturing PMI in February was 56.3, which was somewhat lower than the previous month’s reading of 57.7 but still well inside the expansionary zone. According to Pranjul Bhandari, Chief India Economist at HSBC, “Strong international demand continued to boost growth in the Indian manufacturing sector, which increased its purchasing activity and employment.”

“Business expectations also remained very strong,” Bhandari said, adding that about one-third of poll respondents anticipated higher production volumes in the next year.

All three of the subsectors under observation—consumer, intermediate, and investment goods—saw improvements in business conditions. Midway through the last fiscal quarter, output increased, bringing the current growth run to 44 months. Manufacturers commented on ongoing improvements in demand, technology investment, and the launching of new projects when an uptick was seen. According to the poll, the pace of growth slowed to its lowest level since December 2023, although it was strong overall.

Panelists attributed the 44th consecutive increase in new business intakes in February to high customer demand and attempts to outprice their rivals.

Although the total growth rate slowed to its lowest level since December 2023, it was still higher than its long-term average. February saw a sharp increase in new export orders as producers continued to take advantage of the high demand for their products throughout the world. According to the study, the rate of growth was rapid, but slower than January’s close to 14-year high.

Manufacturers continued to raise their workforces in February in response to the increase in new orders, bringing the current employment growth phase to a full year. It notes that the job creation rate was the second-best in the history of the series, only surpassed by the January rate.

Ten percent of businesses indicated increased hiring, while one percent reported employment losses. Although manufacturers increased their buying activity once again, the rate of growth slowed to a level not seen in 14 months. Businesses said that when growth was indicated, strong customer demand prompted them to replenish inventory and protect against future input shortages. Pre-production inventories therefore saw a significant increase in February. The report also noted that typical lead times have improved for the twelfth consecutive year, supporting this.