Registering above the crucial 50.0 threshold for the third consecutive month, India’s manufacturing growth rose to an eight-month high in March driven by a strong rise in business orders, leading firms to scale up output. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-composite single-figure indicator of manufacturing performance was up from 51.1 in February to 52.4 in March. A figure above 50 represents expansion while a reading below this level means contraction.
According to the survey, India’s manufacturing upturn gathered momentum in March, with stronger inflows of new work which lead firms to scale up output. Further, with the improved domestic demand, producers also recorded an increase in new export business. These positive developments encouraged companies to buy more inputs. On the price front, cost inflation accelerated and output charge inflation touched a 16-month high.
The latest expansion was widespread across the three monitored sub-sectors, with consumer goods posting the quickest rate of increase. March data highlighted a third successive monthly rise in order books. New business inflows increased at a solid pace. Growth of new export orders was sustained, but the rate of expansion remained slight. Buying levels increased further in March, which survey participants linked to stock-building initiatives. Although quicker than in February, the rate of growth was slight overall.
Furthermore, the survey highlighted that the backlogs of work decreased in March. These prevented manufacturers from taking on additional workers and employment levels were broadly unchanged again. Meanwhile, input costs rose amid reports of the weaker rupee resulting in higher prices paid for imported raw materials. Tariffs were subsequently raised.
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