Manufacturing sector growth in India recovered the ground lost in February, picking up to its highest in eight months as a faster upturn in total sales underpinned a sharper increase in output.
Registering 58.1 in March, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index was up from 56.3 in February to its highest mark in eight months. The latest reading showed a substantial improvement in the health of the sector that was above its long-run average. Helping boost the PMI was a stronger contribution from its largest sub-component: the New Orders Index. March saw total sales expand to the greatest extent since July 2024, with companies remarking on positive customer interest, favourable demand conditions and successful marketing initiatives. Subsequently, firms scaled up production volumes at the end of FY25. The rate of expansion was sharp, above its historical average and the strongest in eight months. Where international sales expanded, panellists cited gains from Asia, Europe and the Middle East.
Several companies indicated that warehoused goods were used to meet rising sales requirements, which triggered the quickest drop in post-production inventories in over three years. To address potential stockouts, Indian manufacturers stepped up buying activity in March. Inputs were purchased to the greatest extent in seven months, and at a rate that was well above the series average.
March data showed that capacity pressures among manufacturers remained mild. Outstanding business rose at a marginal pace that was slower than in February.
Employment, nevertheless, rose at solid rate in the context of survey data. Amid reports of higher prices for copper, electronic items, leather, LPG and rubber, cost burdens rose further. The overall rate of inflation accelerated to a three-month high, but was well below its long-run average. Conversely, there was a softer increase in prices charged for Indian goods. March's rise was moderate and the weakest in exactly one year.
Finally, favourable demand conditions, better customer relations and projects pending approval underpinned upbeat forecasts for output levels in the coming 12 months.
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