The expansion in India's manufacturing industry slowed to a 14-month low in February because of weak growth in new orders and production. This is according to the PMI monthly survey report on Monday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) for February was 56.3, down from 57.7 in January. However, the PMI reading remained in the 'expansionary' zone. A PMI reading above 50 indicates expansion, and a reading below 50 indicates contraction.

"While output growth slowed to its weakest level since December 2023, the overall momentum in India's manufacturing sector remained broadly positive in February," said Pranjul Bhandari, chief India economist at HSBC. The pace of expansion remained robust, although slower than January's 14-year high, the survey said. New export orders grew strongly in February, the survey said, as manufacturers continued to benefit from strong global demand for their goods.

In addition, favorable domestic and international demand prompted companies to increase purchasing activity and hire additional workers. "Business expectations also remained very strong, with nearly a third of survey participants expecting more production in the coming year," Bhandari said.

On the employment front, manufacturers continued to add to their workforce in February. The rate of job creation was the second-best in the history of the series, trailing only the rate recorded in January. "One in ten companies indicated more hiring activity, while one% of companies eliminated jobs," the survey said.

According to the survey, cost burdens saw the slowest growth in a year in February, but inflation remained elevated due to a surge in demand. The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers at a panel of about 400 manufacturers. On the economic front, the Indian economy grew at 6.2% in the December quarter, recovering sequentially from a seven-quarter low, but the expansion remained subdued compared to the previous year.

For the full fiscal year 2024-25 (April 2024 to March 2025), the government has now projected GDP growth at 6.5%. This is slightly higher than the earlier estimate of 6.4% but lower than the revised growth rate of 9.2% for 2023-24.