Manufacturing sector PMI higher than expected

Expansion in India's manufacturing sector stood at a higher-than-expected rate in February, on support from strong domestic orders, according to the HSBC India Manufacturing Purchasing Managers' Index (PMI) prepared by global financial information services company Markit.

The HSBC India Manufacturing PMI -- a composite indicator measuring factory output and operating conditions in the manufacturing sector -- showed that India posted a reading of 54.2 in February, up from 53.2 in January.

The index had remained above 50 pointing to growth for around four years. According to the data, manufacturing activity received a boost from increased domestic orders as also a rise in factory output, indicating a quick recovery. The index, however, was below the long-run series average.

According to Leif Eskesen, chief economist  for India at HSBC, manufacturing activity picked up on the back of stronger growth in domestic orders. He added, coupled with some replenishment of inventories, this lifted growth in output and purchases.

Output was up for the 47th month while export orders registered growth in the month, in line with the strong demand from foreign clients. The total export business, however, grew at the slowest pace in six months.

According to the survey, the pace of growth was solid and faster than that seen in January, with almost 35 per cent of the monitored companies signaling increased output at their units, while 17 per cent registered a fall.