Manufacturing boom drives India's private sector growth in February
20 Feb 2026

India's private sector witnessed a significant growth in February, driven by a surge in manufacturing activity and strong domestic demand.

The HSBC flash India Composite Purchasing Managers' Index (PMI), published by S&P Global, jumped to 59.3 from January's 58.4.

This is the highest level in three months and slightly above the Reuters poll median forecast of 59, indicating expansion as readings above 50 are considered positive for economic growth.

Surge in new orders and production
Growth drivers

The PMI surge was largely fueled by a sharp increase in new orders, which grew at the fastest rate since November.

Businesses attributed this growth to robust domestic demand, improved marketing efforts, and a resurgence in local tourism.

International orders also picked up, growing at their fastest pace in five months.

This overall demand boost led to stronger factory output and sales, with production growth among goods producers hitting a four-month high.

Services sector remains stable
Sector performance

Despite the manufacturing boom, the services sector remained stable with a PMI of 58.4 against January's 58.5. However, new business growth in this sector eased to a 13-month low.

Despite this slowdown, service firms outperformed manufacturers in export demand.

The improved sales momentum led to increased hiring as companies ramped up staffing levels at a faster pace than before.

Rising inflationary pressures
Cost concerns

The PMI survey also highlighted rising inflationary pressures, with input costs rising at their fastest rate in 15 months. This has pushed output charge inflation to a six-month high.

Service firms witnessed the steepest rise in input prices in two-and-a-half years while factory input price inflation remained stable from January.

The combination of strong growth and rising cost pressures could pose challenges for the Reserve Bank of India's policy stance.

RBI likely to hold key policy rate at 5.25%
Rate forecast

Despite the challenges posed by rising cost pressures, the Reserve Bank of India is expected to keep its key policy rate unchanged at 5.25% for the rest of the year.

This decision comes in light of retail inflation standing at 2.75% last month after revisions were made to the consumer price index basket and base year.

The latest PMI data indicates India's economic expansion remains robust, with manufacturing leading private sector growth.