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India Manufacturing Growth Eases In February

India's manufacturing sector growth slowed in February, amid further gains in factory orders, output and exports, but fractional job creation, survey results from IHS Markit showed on Monday.

The headline IHS Markit manufacturing Purchasing Managers' Index, or PMI, decreased to 54.5 in February from 55.3 in January. Any reading above 50 indicates expansion in the sector.

Manufacturing production rose in February as firms reacted positively to new business gains and favorable market conditions. Growth was led by consumer goods makers and intermediate goods producers.

New orders rose sharply in February and exports contributed to the growth in total sales, with Indian companies logging the second strongest in international demand for their goods since November 2018.

The hiring activity was restricted in February, and the latest increase in jobs was the weakest in three months.

Input buying increased in February and the stocks of purchase continued to expand at the quickest in nearly three-and-a-half years. Stock of finished goods declined as inventories were used to meet the requirements.

On the price front, input costs increased moderately in February and selling prices rose modestly.

Pressure on the capacity of manufacturers and their suppliers was less, with vendor performance and backlogs increasing fractionally in February.

"However, alarm bells are ringing for Indian goods producers as the COVID-19 outbreak poses threats to exports and supply chains," Pollyanna de Lima, principal economist at IHS Markit, said.

"Businesses became less confident about the year-ahead outlook for output, in turn restricting hiring activity."

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