India Clocks Manufacturing PMI At 16-Year High Of 59.1 On Rise In Output, New Orders
India clocked robust manufacturing activity in March, the HSBC Purchasing Managers’ Index (PMI) data revealed on Tuesday. The country’s manufacturing sector clocked a PMI of 59.1, which marked the highest seen in 16 years. The data noted that the seasonally adjusted HSBC India Manufacturing PMI soared to a 16-year high owing to a robust increase in output and new orders since October 2020. Notably, the PMI number for February stood at 56.9.
A reading above 50 denotes expansion in the sector activity, while one below the 50 level indicates contraction. While the manufacturing sector displayed expansion, the PMI number still remained below the flash estimate of 59.2. The HSBC India Manufacturing PMI survey is put together by S&P Global based on responses to questionnaires shared to purchasing managers in a panel of nearly 400 manufacturers.
The survey revealed that employment levels made a recovery to the positive side and companies increased their buying. March witnessed a muted pick-up in cost pressures, however, customer retention remained the priority for goods producers who hiked their charges to the minimum extent in about a year, it stated.
The findings revealed that operating conditions improved considerably and this led to a robust growth of new orders, output, and input stocks, along with better employment creation. The pace of growth in new orders became the quickest seen in about three-and-a-half years during the month.
New work opportunities started coming in from both domestic and export markets, reflecting an improvement in sales to Africa, Asia, Europe, and the US. The expansion pace of new export orders was the fastest since May 2022. Manufacturing output also rose for the thirty-third consecutive month in March. The growth accelerated across the consumer, intermediate, and investment goods sectors.
Elaborating on the findings, Ines Lam, Economist, HSBC, said, “India’s March manufacturing PMI rose to its highest level since 2008. Manufacturing companies expanded hiring in response to strong production and new orders. On the back of strong demand and a slight tightening in capacity, input cost inflation picked up in March.”
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The pace of job creation in March was mild, however, it was also the best seen since September 2023. “Anecdotal evidence highlighted the recruitment of mid-level and fulltime employees. Pressure on the capacity of goods producers remained mild, as indicated by only a slight increase in outstanding business volumes. Meanwhile, suppliers were generally able to deliver purchased inputs in a timely manner, as signalled by a renewed improvement in lead times. Despite remaining modest by historical standards, cost pressures were at their highest in five months. Companies reported having paid more for cotton, iron, machinery tools, plastics and steel. A very small proportion of panellists opted to increase their selling prices in March (fewer than 5%), with customer retention efforts preventing several companies from hiking their fees,” the survey noted.
