India’s manufacturing PMI falls to 54.0 in March

India’s manufacturing activity in March fell marginally to 54.0 from February’s 54.9. The fall highlighted the joint-weakest rate growth since September 2021, stated S&P Global India Manufacturing Purchasing Managers’ Index. 

The report said that while business conditions improved, the latest results showed slower expansions in factory orders and production as well as renewed decline in new export orders. Business confidence which fell to its lowest level in two years, was dampened by inflation concerns. 

"For now, demand has been sufficiently strong to withstand price hikes, but should inflation continue to gather pace we may see a more significant slowdown, if not an outright contraction in sales,” said Pollyanna De Lima, Economics Associate Director at S&P Global.

While new orders continued to increase, the rate of expansion eased to six-month low. Successful marketing efforts and improved demand conditions drove growth in areas it was reported in. 

“Rising sales supported a further upturn in production volumes, the ninth in consecutive months. Despite slowing to the weakest since last September, the rate of expansion was marked and outpaced its long-run average,” the report said.

Input prices increased at the end of the fiscal year 2021-22. Chemical, energy, fabric, foodstuff and metal were all reportedly costlier than in February. Overall rate of inflation quickened and outpaced its long-run average, but was also the second-slowest in six months. 

Output prices rose too, and producers sought to share part of the additional cost burden with their clients. The rate of charge inflation picked up to five-month high, but was moderate in its long-run average. 

Optimism about growth prospects was subdued among Indian manufacturers, with overall sentiment hitting a two-year low. 

However, following three months of job shedding, headcounts stabilised in March. 

“Pre-production inventories continued to rise in March, marking a nine-month sequence of accumulation. The upturn was solid and quicker than that seen in February,” the report said, further adding, “Finally, there was a renewed decline in new export orders received by Indian goods producers, ending an eight-month sequence of growth. However, the overall rate of reduction was only modest.”

Also read: India's manufacturing PMI improves to 54.9 in Feb

Also read: India’s manufacturing PMI falls to four-month low in Jan at 54