The growth rate in India’s business activity accelerated to a 7-month high in February driven by a strong demand for both manufacturing and services, according to a private economic survey released on Thursday.

HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 61.5 this month from 61.2 in January, which is above the 50-mark that separates expansion from contraction for the 31st consecutive month.

“The pace of acceleration in the output of India’s manufacturers and service providers, combined, was at a 7-month high in February. Encouragingly, new export orders rose sharply, particularly for goods producers,” said Pranjul Bhandari, chief India economist at HSBC.

The manufacturing PMI for February rose to 56.7 from last month’s 56.5, its highest since September, and the preliminary services PMI rose to 62.0 from 61.8 in January to reach its highest level in the last 7 months.

Overall international orders increased at the fastest pace since September.

The survey is in tune with the RBI bulletin released on Tuesday which states that the Indian economy continues to sustain the momentum achieved in the first half of 2023-24 and a fresh round of capital expenditure by the corporate sector is expected to fuel the next leg of growth.

Consumer confidence strengthened further in January 2024, driven especially by optimism about the general economic situation and employment conditions, as per the RBI’s latest survey of households. Various enterprise surveys also point towards strong business optimism, the RBI bulletin points out.

It also states that high frequency indicators point towards sustained strength in demand conditions in the economy during January 2024. E-way bills grew by 13.2 per cent in December 2023. Toll collections expanded by 15.5 per cent year-on-year in January 2024, although they sequentially moderated from a record in the previous month.

Automobile sales had registered an expansion of 23.3 per cent year-on-year in January with two wheeler sales recording double digit growth. Retail tractor sales recorded a seven-month high growth at 21.2 per cent year-on-year in January 2024. Vehicle registrations recorded strong year-on-year growth.