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Manufacturing PMI was 54.2 in February, below the long-run series average but higher than its reading of 53.2 in January. The latter reading was a fall after a six-month high of 54.7 in December. A reading above 50 shows growth; below 50 is a contraction.
However, the PMI index doesn't give a full picture of the sector. By way of illustration, the official data on industrial growth showed a decline of 0.6 per cent in December (with a more drastic fall in November).
For that matter, around two-thirds of the companies surveyed for the PMI index showed either a fall in growth or no growth at all. For February, 35 per cent of the surveyed companies showed a rise in output; 17 per cent experienced a contraction. The remaining 48 per cent showed neither. In the same month, 29 per cent of the monitored companies experienced growth in new orders and 14 per cent a decline; the other 57 per cent showed neither.
The PMI data comes a day after the Union budget proposals for 2013-14 were presented to Parliament by Finance Minister P Chidambaram.
The survey also showed inflation pressure remained firm, with input cost remaining steady and output prices rising. Average selling prices were at their highest level since August 2012. The price of all raw materials rose.
"Manufacturing activity picked up on the back of stronger growth in domestic orders. Together with some replenishment of inventories, this lifted growth in output and purchases. The numbers underscore that the room for monetary policy easing is limited, even with progress on fiscal consolidation." said Leif Eskesen, chief economist for India and Asean at HSBC.
