The country’s manufacturing activity index rose in February to 54.9 as the threat from a third Covid-19 wave eased, a private survey showed. However, the Russia-Ukraine conflict will add to inflationary pressures and hurt consumer sentiment.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose to 54.9 in February from 54.0 in January.

The February PMI data pointed to an improvement in overall operating conditions for the eighth straight month. In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

Sustained sales growth supported the upturn in the manufacturing sector output in February. Moreover, firms responded to strong increases in new work orders by increasing production and higher input purchases, the survey said.

“Latest PMI data for India’s manufacturing sector revealed an improvement in operating conditions in February. Output and new orders expanded at stronger rates, while buying activity continued,” Shreeya Patel, an economist at IHS Markit, said.

“There were, however, some key concerns that continued to threaten growth. Most prominently, cost pressures remained elevated as a result of shortages while delivery times lengthened once again. However, a key threat to manufacturers comes from only marginal increases in selling prices.”

Darren Aw, Asia Economist, Capital Economics, said: “Manufacturing PMI rebounded in February as the Omicron outbreak subsided and containment measures were scaled back.”