Economic Activity Index Rises to 51.4 in February, Driven by Consumption and Manufacturing Sectors

India's Economic Activity Edges Higher in February

The Moneycontrol Eco Pulse Index rose to 51.4 in February, up from 51.1 in January, signaling a continued expansion in domestic demand. This reading above 50 indicates a steady momentum in consumption and manufacturing, despite emerging weakness in infrastructure activity and external headwinds.

Key Drivers

Consumption indicators led the improvement, with high-frequency data showing sustained momentum in retail spending, mobility, and payments. UPI transactions rose 26.6% to 20.39 million, while non-food credit recorded its fastest expansion in 20 months. Credit card spending growth accelerated to 1.7% from 0.9% in the previous month.

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Broad-Based Consumption Gains

The consumption gains were broad-based, with four-wheeler registrations surging 27.2%, marking the fastest growth in 16 months. Two-wheeler and tractor sales rose 25.6% and 36.8%, respectively. Fuel demand also reflected steady activity, with diesel consumption growth picking up to 4.3% and petrol consumption holding firm at 6.1%.

Manufacturing and Labour Market Indicators

Manufacturing added to the momentum, with the HSBC Manufacturing PMI rising to a four-month high of 56.9 from 55.4. Labour market indicators also improved, with the Naukri Job Index rising 11.9%, while urban unemployment eased to 6.6% in February. E-way bill generation accelerated to 18.8% from 15.8%, signaling stronger goods movement.

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External Risks and Outlook

However, some sectors showed signs of strain, with natural gas consumption declining 0.4% and electricity demand growth slowing to 1.5%. Exports remained weak, and external risks are building, with Brent crude rising nearly 60% since February 28 and the dollar strengthening 2.3%. Economists have started to trim FY27 growth forecasts amid prolonged geopolitical uncertainty.