The Indian manufacturing sector lost its growth momentum in the month of March, on the back of softer increases in new orders, production, input buying and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 52.6 in March from 54.3 in February. However, the PMI reading stood above the watershed 50 mark, which differentiates growth from contraction.
According the report, the increase in new orders was the slowest in six months, while competitive conditions and the upcoming elections reportedly curbed the upturn. Further, new orders from external markets also witnessed softer growth in the reported month. The report found rise in manufacturing employment but it stood weakest in eight months, as 92% of companies left payrolls unchanged amid adequate manpower to handle existing workloads.
On the inflation front, input costs and output charges saw softer increases. In both cases, rates of inflation were below their respective long-run averages. Meanwhile, business sentiment strengthened to a seven-month high during March. Companies predicted that marketing initiatives, capacity expansion plans and favourable public policies after the elections would support production growth over the course of the coming 12 months.