India: Private sector PMI increases in February
March 3, 2021
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit rose to 57.3 in February from 55.8 in January. Consequently, the PMI ticked up further above the 50-threshold indicating an increase in business activity from the previous month.
The services PMI inched up from 52.8 in January to 55.3 in February as output expanded at the strongest pace in a year. Moreover, new orders increased for the fifth month running and at the quickest pace since October. That said, employment levels continued to decline, but the pace of job cutting was relatively moderate overall in February. On the price front, input prices rose at the quickest pace since February 2013, but output prices were broadly stable as competitive pressures refrained firms from raising prices despite the rise in input costs.
On the manufacturing side, the PMI increased ticked down marginally to 57.5 in February from 57.7 in January. The ongoing recovery in demand kept new orders and production expanding at a healthy albeit softer pace in February relative to January. Moreover, employment levels fell for the eleventh consecutive month in February as Covid-19 restrictions continued to hamper operating conditions. On the price front, input prices rose at the quickest pace in 32vmonths and likely tied to supply constraints and higher demand for raw materials.
Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:
"There were further jobs losses across both the manufacturing and service sectors, which also could restrict domestic consumption in the coming months. However, with capacity pressures mounting, business sentiment strengthening and the vaccination programme widening, it seems that the best days are ahead of us regarding employment growth."
Author: Steven Burke, Economist