India’s manufacturing activity continued to expand in February with the HSBC Purchasing Managers’ Index (PMI) for the sector coming in at 56.9, data released on March 1 showed.

At 56.9, the February manufacturing PMI is above the flash estimate of 56.7 released on February 22 and is the highest in five months. It is also above the key level of 50, which separates expansion in activity from contraction, for the 32nd month in a row.

The HSBC final India Manufacturing PMI indicates that production growth continued to be strong, supported by both domestic and external demand,” said Ines Lam, an economist at HSBC.

“Manufacturing firms’ margins improved as input price inflation slipped to the lowest since July 2020. Buoyed by robust demand and improving profit margins, manufacturers have an optimistic outlook about future business conditions,” Lam added.

The latest PMI number comes a day after the statistics ministry said India’s percent in with growth in the manufacturing sector’s gross value added moderating to 11.6 percent from 14.4 percent in the previous quarter.

The manufacturing PMI had averaged 57.9 in July-September 2023 and 55.5 in the subsequent quarter. In the first two months of 2024, it has averaged 56.7.