Strong Manufacturing Growth Lifts Flash PMI to Three-Month High of 59.3 in Feb

Why It Matters

The strong manufacturing rebound signals robust economic momentum, yet heightened inflation could constrain monetary policy, influencing investment and growth prospects across India’s private sector.

Key Takeaways

• Manufacturing PMI hits three‑month high of 59.3
• New orders rise fastest since November
• Services PMI stalls at 58.4, 13‑month low growth
• Input‑price inflation peaks at 15‑month high
• RBI likely holds rates at 5.25% this year

Pulse Analysis

The flash Composite PMI released by HSBC and S&P Global showed India’s private sector expanding at a robust pace in February, with the index climbing to 59.3 from 58.4 in January – the strongest reading in three months. Manufacturing drove the surge, as total new orders accelerated to their quickest pace since November and output rose to a four‑month high. The uptick reflects strong domestic demand, buoyed by tourism, marketing campaigns and a rebound in international sales, which grew at the fastest rate in five months.

Despite the manufacturing boom, the services sector showed signs of softening; its PMI held steady at 58.4 while new business growth slipped to a 13‑month low. At the same time, price pressures intensified, with input‑cost inflation for manufacturers hitting a 15‑month peak and services experiencing the steepest rise in two‑and‑a‑half years. These inflationary signals, combined with a retail inflation rate of 2.75% after the CPI basket revision, are likely to keep the Reserve Bank of India cautious on monetary policy.

Looking ahead, the RBI is expected to maintain its policy repo rate at 5.25% through the year, giving firms time to adjust to higher cost structures. Continued strength in export orders could offset domestic price pressures, supporting investment in capacity expansion and supply‑chain integration. Analysts will watch whether the manufacturing momentum can sustain growth without triggering tighter monetary conditions, a balance that will shape India’s trajectory as a key engine of global economic growth.

Strong manufacturing growth lifts Flash PMI to three-month high of 59.3 in Feb

By Reuters · Updated · February 20, 2026 at 11:35 AM

India’s private sector accelerated in February led by robust demand for goods even as services growth was broadly steady, according to a survey that also showed intensifying inflationary pressures.

HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.3 in February from January’s 58.4 — the strongest in three months and above a Reuters poll median forecast of 59.0. The 50‑mark separates expansion from contraction.

The improvement was supported by robust total new orders which rose at the quickest pace since November. Businesses attributed gains to strong demand, local tourism and marketing efforts. International sales also increased at the fastest pace in five months, bolstering overall demand.

Goods producers reported a sharper rise in sales, pushing output growth to a four‑month high. Services firms, however, saw growth in new business ease to a 13‑month low, even as they outperformed manufacturers on export orders.

While the preliminary headline reading for manufacturing PMI rose to 57.5 from 55.4, the services PMI was little changed at 58.4 versus 58.5 in January.

Better sales supported hiring at a faster pace and optimism about year‑ahead activity improved to its strongest in a year.

The survey also showed higher price pressures with input costs rising at their fastest rate in 15 months and pushing overall output‑charge inflation to a six‑month high. Services firms faced the steepest rise in input‑price inflation in two‑and‑a‑half years, while factory input‑price inflation remained unchanged from January.

That combination of solid growth and rising costs, especially for services, will keep the Reserve Bank of India cautious as retail inflation rose 2.75 % last month, after the statistics ministry updated the consumer‑price‑index basket and the base year to 2024.

The central bank is expected to hold its key policy rate at 5.25 % this year, according to a Reuters survey.