India: The private sector expands at a faster pace in February
The composite Purchasing Managers’ Index (PMI) produced by Nikkei and IHS Market improved to 53.8 in February from 53.6 in January, rising further above the 50-point threshold that separates expansion from contraction in the private sector.
The services PMI increased to 52.5 in February from 52.2 in January on the back of a faster increase in new business orders. The uptick in demand was driven by domestic sales—while external orders retreated—and led to a faster expansion of total output. On the back of these dynamics, employment levels increased and backlogs of work accumulated at the fastest pace in 16 months. In terms of prices, input costs rose in February, partly due to greater fuel costs, although the rate of inflation slowed from January. Output price inflation moderated to the joint-weakest rate in 25 months. In terms of expectations, business sentiment about the coming 12 months improved from January but remained below the long-run average.
The manufacturing PMI also fared well in February, rising to 54.3 from 53.9 in January. This came on the back of a sharp acceleration in domestic and foreign sales growth and led to a boost in output and employment. Suppliers’ delivery times were broadly unchanged in February. As a result of these outturns, stocks of finished goods decreased as firms used them to fulfill orders. In terms of prices, both input and output price inflation accelerated slightly in February but remained subdued by historic standards.