India Manufacturing PMI Eases to 56.3 in February 2025
Why in the news
The February reading of India’s factory activity index fell to its weakest level in over a year, yet the sector remained firmly in expansion mode.
Key facts
- Manufacturing PMI: 56.3 in February versus 57.7 in January; the lowest since December 2023.
- New orders from home and abroad rose for the 44th consecutive month.
- Jobs: factories added staff, with hiring the second highest in the history of the survey.
- Prices: input cost pressure eased, yet firms still raised selling prices because labour and materials such as bamboo, leather, rubber and telecom items cost more.
- Consumer, intermediate and investment goods were all covered in the sector breakdown.
Expert view
Pranjul Bhandari, Chief India Economist at HSBC, said that even at this slower pace manufacturing remains strong with upbeat business outlooks, and that global demand is supporting growth, leading firms to buy more and hire.
About PMI
The Purchasing Managers’ Index is a leading indicator of business activity across manufacturing and services, built from monthly surveys of companies.
| Type | What it covers |
|---|---|
| Manufacturing PMI | Performance of factories |
| Services PMI | Activity in services |
| Composite PMI | Combined manufacturing and services |
Components and weights
| Variable | Weight |
|---|---|
| Stock of Items Purchased | 10% |
| Suppliers’ Delivery Times | 15% |
| Employment | 20% |
| Output | 25% |
| New Orders (largest) | 30% |
Reading the index
- Above 50: business activity is expanding.
- Below 50: activity is contracting.
- Near 50: little change in conditions.
- Growth or fall is judged by comparing the current month with the previous month.
Global facts
- PMI was first published in 1948 by the Institute for Supply Management (ISM), USA.
- Singapore’s PMI is compiled by SIPMM; IHS Markit produces PMIs for 30 countries, India included.
- India’s manufacturing PMI draws on responses from 500 manufacturing firms.
Significance
- It is released before GDP or industrial output, so it helps forecast economic trends.
- Manufacturers and suppliers use it to set production and anticipate demand.
- Stock market investors use it to judge economic health.
Concerns
Inflationary pressure and global uncertainty could weigh on momentum ahead.
Exam angle
- Threshold between growth and contraction: 50.
- Highest-weighted PMI component: New Orders (30%).
- PMI is a leading, survey-based indicator.