India's combined output of manufacturing and services activity rose to 61.5 in February from 61.2 in January, thus growing at the fastest pace since July 2023, according to the survey by HSBC Flash India Composite PMI (purchasing managers’ index) Output Index, by S&P Global.

"On the price front, the rate of charge inflation for Indian goods and services receded to the weakest in a year as companies generally observed a lack of cost pressures. Input prices increased at the slowest pace in three-and-a-half years," says the survey.

According to the survey, growth improved in both the manufacturing and services economies owing to an increase in demand, investment in technology, efficiency gains, expanded clientele and favourable sales developments.

"The pace of acceleration in the output of India’s manufacturers and service providers, combined, was at a 7-month high in February. Encouragingly, new export orders rose sharply, particularly for goods producers. Input prices rose at the slowest pace in three-and-a[1]half-years. Producers were able to do both – lower the rate of increase in output prices and improve margins," says Pranjul Bhandari, chief India economist, HSBC.

As per the survey, new orders across the domestic private sector rose for the 31st successive month. Moreover, the domestic services output noted a stronger increase in sales as compared to manufacturing. This increase in new order books was primarily led by exports, which grew the fastest since September last year. "Here the upturn was led by goods producers. External sales were reportedly fuelled by stronger demand from clients based in Africa, Asia, Australia, Europe, the Americas and the Middle East," says the survey.

Meanwhile, despite new order books, the employment generation in the private sector continued to remain unchanged in February. “Payroll numbers were unchanged since January, thereby ending a 20-month sequence of job creation. Anecdotal evidence suggested that workforces were sufficient for current requirements,” says the survey.

Moreover, the month under review witnessed a slight and soft pace of accumulation of business volumes as compared to January.

According to the survey, the domestic manufacturers also indicated a general lack of pressure on the capacity of their suppliers, with average lead times broadly stable in February. This occurred despite a pick-up in the growth of input purchasing, according to the survey.

Notably, the domestic cost pressures also witnessed a moderation in February. According to the survey, aggregate input prices rose only slightly, and at the weakest pace in three-and-a-half years. Services companies noted a stronger increase in cost burdens than manufacturers, although slowdowns were registered in each case.

"The overall level of business confidence slipped from January's four-month high but remained indicative of a robust degree of optimism towards growth prospects. Positive sentiment was pinned on hopes that market conditions will remain favourable, thereby boosting demand for goods and services and subsequently supporting economic output," says the survey.

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