Business activity in February: The country’s business activity surged to its highest level in seven months in February, driven by robust demand in both the manufacturing and services sectors, according to a business survey released on Thursday. This trend aligns with the results of a Reuters poll, indicating that India, the fastest-growing major economy, is all set to sustain steady growth in the coming years.

The flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global and HSBC, climbed to 61.5 this month, up from January's final reading of 61.2, marking the 31st consecutive month of expansion. Notably, both manufacturing and services recorded notable gains, with the manufacturing PMI reaching its highest level since September at 56.7, while the services PMI hit a seven-month high of 62.0.

New export orders saw a sharp increase, particularly in the manufacturing sector, contributing to the overall rise in business activity. Additionally, optimism among manufacturers for the coming year reached its highest level since December 2022, indicating positive sentiment about future prospects.

However, employment levels did not witness growth for the first time since May 2022, suggesting some challenges in the labour market despite the overall economic expansion.

While services companies experienced stronger cost pressures compared to manufacturers, the survey noted a moderation in overall input prices, rising at the slowest pace in three-and-a-half years. This allowed producers to mitigate cost increases and improve margins, providing relief to the Reserve Bank of India.

The RBI is expected to maintain its key repo rate unchanged in the near term, with the possibility of a rate cut in the July-September quarter. The positive outlook for business activity, coupled with easing price pressures, offers reassurance for the economy as it navigates through evolving market dynamics.

(With Reuters inputs)