India’s Composite Flash PMI Rises In February, Indicating Private Sector Growth: HSBC Report

New Delhi, Feb 22 (KNN) After three consecutive quarters of decline, India’s Composite Flash Purchasing Managers’ Index (PMI) saw a sharp rebound in February, signaling an acceleration in private sector growth, according to a report by HSBC. The index rose to 60.6, up from 57.7 in January, driven largely by a surge in services sector activity.

While the manufacturing PMI also reported growth, the pace of expansion was softer compared to the previous month. HSBC noted that data from January and February suggests a potential uptick in the composite index for the current quarter after a period of slowdown.

The report highlighted that strong global restocking trends have lifted India’s new goods export orders. Additionally, the recent depreciation of the rupee against the dollar—down 3.2 per cent since October—is expected to enhance the competitiveness of India’s fast-growing services exports sector.

“New export orders for manufacturers continued to rise at an elevated pace, prompting firms to increase employment in response to a higher order-to-inventory ratio,” HSBC said. 

The services sector also experienced a sharp rise in export business orders, with professional services playing a significant role in driving growth. In January, India’s services exports outpaced goods exports, further reflecting the sector’s resilience.

Easing Input Prices, Improved Margins, and Rate Cut Expectations

The report observed a decline in input prices while output prices continued to rise, leading to improved profit margins, particularly for goods producers. 

HSBC anticipates that these trends, along with broader economic conditions, could prompt a 25 basis points (bps) rate cut in the Reserve Bank of India's (RBI) April policy meeting.

HSBC’s analysis of 100 economic activity indicators suggests a recovery in the December quarter, with 65 per cent of indicators showing positive growth, compared to 55 per cent in the September quarter. 

Early trends in January indicate that over 60 per cent of indicators are continuing to grow positively, although this remains below the 75 per cent levels observed in June 2024.

The February flash PMI data provides an early indication of the final manufacturing, services, and composite PMI figures, which will be released in full later this month. Typically, flash PMI estimates are based on 80-90 per cent of total survey responses collected each month.

(KNN Bureau)