The strong manufacturing sector expansion seen in India at the start of the year was maintained in February, with rates of growth for factory orders, exports and output holding close to January's recent highs. That said, while firms were willing to step up input buying, hiring activity increased only fractionally.

Meanwhile, business sentiment faded on the back of concerns regarding the impact of the COVID-19 outbreak on exports and supply chains. At the same time, the rate of input cost inflation remained negligible in the context of historical data. 

At 54.5 in February, the headline seasonally adjusted IHS Markit India Manufacturing PMI held close to January's near eight year high of 55.3. This signalled another robust improvement in operating conditions across the sector.

Manufacturing production increased at a similar pace to January's 91-month high, as firms reacted positively to new business gains and favourable market conditions.

Growth was led by consumer goods makers, followed closely by intermediate goods producers. Aggregate new orders increased sharply in February, with growth little-changed from January's recent high. Firms that reported higher sales commented on successful marketing campaigns, strengthening demand and supportive economic
conditions.

February data showed that exports contributed to the expansion in total sales, with Indian companies noting the secondstrongest improvement in international demand for their goods since November 2018. There was a notable rise in new orders from abroad at consumer goods producers and modest gains in the intermediate and capital goods sectors.

Commenting on the latest survey results, Pollyanna de Lima, Principal Economist at IHS Markit, said: ''Factories in India continued to benefit from strong order flows in February, from both the domestic and international markets. The pick-up in demand meant that companies were able to further lift production and input buying at historically-elevated rates.''