PMI Manufacturing rose to 4-month high of 56.9 in February
India's Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global (HSBC India Manufacturing PMI), rose to 56.9 in February 2026 — up from 55.4 in January, the highest reading since October 2025 and a four-month high.
Factory output expanded at the fastest pace in four months, supported by strong domestic demand and rising new orders.
Employment in manufacturing rose at its fastest pace in four months as firms expanded headcount to meet higher workloads.
New export orders slowed to the weakest pace in 17 months — suggesting that while domestic demand is buoyant, external demand faces headwinds from the Iran war and global trade disruption.
Input cost inflation remained moderate while output prices rose faster than the long-run trend, indicating improving manufacturer margins.
PMI: Methodology and Interpretation
The Purchasing Managers' Index (PMI) is a survey-based economic indicator that measures the activity level of manufacturing and services sectors. Published monthly by S&P Global (formerly IHS Markit), the India Manufacturing PMI is based on surveys of approximately 400 industrial companies. It is a leading indicator — released before official GDP data — making it closely watched by investors, central banks, and policy analysts.
Key Details
- PMI is compiled from five sub-indices: New Orders (30% weight), Output (25%), Employment (20%), Supplier Delivery Times (15%), and Stocks of Purchases (10%).
- Threshold of 50: PMI above 50 signals expansion (conditions improving compared to the previous month); below 50 signals contraction; at 50 = unchanged.
- A reading of 56.9 indicates strong expansion — well above the 50 threshold and above India's long-run manufacturing PMI average of approximately 53–54.
- Manufacturing PMI is distinct from Services PMI and Composite PMI (which combines both).
- India's PMI data is collected and published monthly; the final reading is released on the first business day of the following month.
The February PMI of 56.9 is a strong leading indicator of manufacturing sector health — its four-month high status signals a rebound from the mild softening seen in October–December 2025, consistent with domestic demand resilience.
India's Manufacturing Sector: Policy Framework
India's manufacturing sector contributes approximately 17% of GDP and employs about 27% of the industrial workforce. The government's PLI (Production Linked Incentive) scheme, Make in India 2.0, and National Manufacturing Policy target raising manufacturing's GDP share to 25% by 2025 (subsequently revised to 2030). The high PMI reading reflects the early benefits of these policy interventions.
Key Details
- PLI scheme: 14 sectors; total outlay ~Rs 1.97 lakh crore over 5 years; sectors include electronics, pharmaceuticals, auto, textile, food processing, telecom equipment, solar modules.
- Make in India 2.0: focuses on 27 sectors with enhanced ease of doing business measures.
- National Manufacturing Policy 2011 (revised): targets manufacturing sector reaching 25% of GDP.
- India's manufacturing PMI has remained above 50 for over 40 consecutive months (since mid-2022) — indicating an unusually sustained expansion phase.
- Key manufacturing hubs: Maharashtra, Gujarat, Tamil Nadu, Karnataka — contribute disproportionately to national manufacturing output.
The PMI reading reflects actual surveyed conditions among manufacturers — the above-50 streak aligns with PLI scheme's production ramp-up across sectors like electronics (Apple, Samsung factories in India) and pharmaceuticals.
PMI as a Leading Indicator vs. GDP Data
GDP data in India is released quarterly with a significant lag (approximately 60 days after quarter end), making monthly PMI data valuable for near-real-time assessment of economic activity. RBI and MPC members explicitly reference PMI data in their monetary policy statements as a gauge of economic momentum.
Key Details
- India's GDP data release: Ministry of Statistics and Programme Implementation (MOSPI); quarterly, with advance estimates and revised estimates.
- PMI is a diffusion index — it measures the breadth of change (how many companies report improvement) not the magnitude — so it complements GDP quantity data.
- Manufacturing PMI above 55 for consecutive months signals that the sector is growing strongly enough to likely support headline GDP above 7%.
- Export order slowdown (17-month low in February) is a warning signal — if Iran war disrupts global trade further, this will drag on India's export-led manufacturing.
- Services PMI (India): consistently above 58–60 in recent months — service sector is the stronger growth engine; manufacturing is catching up.
The February PMI data is being read against the backdrop of the Iran war's trade disruptions — domestic demand is sustaining manufacturing expansion even as export prospects cloud over, making the domestic demand story the key positive for India's growth outlook.
- India Manufacturing PMI, February 2026: 56.9 (up from 55.4 in January); 4-month high.
- PMI threshold: 50 = neutral; above = expansion; below = contraction.
- India Manufacturing PMI above 50: over 40 consecutive months (since mid-2022).
- Sub-indices: Output at 4-month high; Employment at 4-month high; New Export Orders at 17-month low.
- Input cost inflation: moderate and unchanged from January; output price inflation: above long-run trend.
- PLI scheme: 14 sectors; ~Rs 1.97 lakh crore outlay; driving manufacturing capacity expansion.
- Manufacturing's share of India's GDP: ~17%; government target: 25% by 2030.
- S&P Global HSBC India Manufacturing PMI: based on ~400 surveyed industrial companies; released on first working day of following month.