India's Manufacturing PMI Hits Three-Month High In March

India's manufacturing activity continued its growth momentum in March, signalling the strongest improvement in operating conditions so far in 2023, driven by resilience in demand and competitive pricing. 

The India Manufacturing Purchasing Managers' Index rose from 55.3 in February to 56.4 in March, according to IHS Markit. A print above 50 means expansion, while a score below 50 indicates contraction.

That said, the PMI average for the final fiscal quarter (55.7) came in below that recorded in the prior period (56.3 in the third quarter).

March data highlighted a further upturn in new business placed with Indian manufacturers, the release stated. Moreover, the rate of expansion was sharp and the fastest in three months.

Continuing the trend that has been recorded on a monthly basis for a year, new export orders rose in March. The rate of expansion quickened from February, though it remained slight and historically subdued. Ongoing improvements in total sales volumes underpinned another increase in production.

Output rose at the fastest pace since last December, and it outpaced its long-run average. Demand resilience also encouraged firms to rebuild their input inventories. Stocks of purchases rose at a sharp rate that was one of the strongest seen in over 18 years of data collection.

Another factor that stimulated buying levels was moderation in cost pressures. March data highlighted the second-weakest increase in input prices in two-and-a-half years. In fact, close to 96% of firms signalled no change in cost burdens since February. Although selling prices increased further at the end of the last fiscal quarter, the rate of inflation was moderate and broadly similar to February.

Goods producers kept payroll numbers broadly unchanged in March. This followed a one-year sequence of monthly increases in employment.

Indian manufacturers expect improved customer relations, new product releases, and advertising to support sales and subsequently production over the course of the coming 12 months. That said, the overall level of positive sentiment slipped to an eight-month low due to concerns surrounding competitiveness and general inflation.