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India's Manufacturing PMI Dips to 53.9 in March Amid Global Headwinds

India's manufacturing sector growth slowed in March, with the HSBC Flash PMI easing to 53.9 amid global economic disruptions linked to the Middle East conflict. Input cost inflation accelerated to its fastest pace in over three-and-a-half years, driven by higher prices for materials like aluminium, chemicals, and fuel. Despite these pressures, firms largely absorbed the added costs, resulting in only a modest rise in selling prices, while job creation reached a seven-month high. The sector also saw the strongest expansion in export orders since last September, with demand noted from clients across multiple global regions.

Key Points: India's March Manufacturing PMI Eases to 53.9

  • PMI eased to 53.9
  • Input cost inflation steepest since Aug 2022
  • Job creation at 7-month high
  • Export orders grew strongly
  • Firms absorbed costs, contained output prices
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India's manufacturing PMI eases in March amid global disruptions, job growth remains strong

India's manufacturing PMI eased in March amid global disruptions, though job growth remained strong and firms absorbed rising input costs.

"Output and new orders slowed noticeably, signalling softer demand and greater uncertainty. - Pranjul Bhandari, HSBC"

New Delhi, April 2

India's manufacturing PMI eased to 53.9 in March as disruptions linked to the conflict in the Middle East are reverberating through the global economy and weighing on Indian manufacturers, the HSBC Flash India PMI data showed on Thursday.

Firms also faced an intensification of cost pressures, the steepest since August 2022. That said, companies mostly absorbed added expenses, as indicated by a modest uptick in selling charges that was the least pronounced in two years, according to the PMI data compiled by S&P Global.

Elsewhere, the latest results also showed that attempts to raise contingency stocks supported job creation and input buying growth.

"Output and new orders slowed noticeably, signalling softer demand and greater uncertainty. Meanwhile, input costs rose sharply across a broad range of items, including aluminium, chemicals and fuels. For now, firms appear to be absorbing much of the increase, keeping output prices relatively contained," said Pranjul Bhandari, Chief India Economist at HSBC.

March data saw input prices increase to the greatest extent in over three-and-a-half years. Aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber and steel were some of the items reported to be up in price, the report noted.

Moreover, Indian manufacturers continued to purchase additional materials for use in production processes and to add to inventories.

"The overall rate of growth slowed to a three-month low, but was historically strong. When explaining the latest upturn, panellists remarked on sales growth as well as their efforts to ensure smooth operations and uninterrupted supply," said the report.

Notably, suppliers to the Indian manufacturing economy were comfortably able to deliver materials in a timely manner, as indicated by a stronger improvement in vendor performance.

Encouragingly, Indian manufacturers registered the strongest expansion in external sales since last September, with gains noted from clients in Australia, Brazil, Canada, mainland China, Europe, Japan, the Middle East, Turkey and Vietnam for example.

"They also raised employment to the greatest extent in seven months and became more optimistic towards the year-ahead outlook for production," said the report.

- IANS

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Reader Comments

P
Priyanka N
The rise in input costs for everything from fuel to steel is worrying. It will eventually hit the common man's pocket, even if companies are holding back price hikes for now. The government needs to keep a close watch on inflation.
A
Aman W
Strong export growth to so many countries is the real positive here! From Australia to Vietnam, 'Make in India' is finding buyers. Global disruptions are temporary, but building a strong manufacturing base is for the long term. đź‘Ť
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Sarah B
While the headline number eased, a PMI of 53.9 is still solidly in expansion territory. The global economy is facing multiple crises, so some slowdown is expected. The key is that the fundamentals—job creation, buying growth—are holding up.
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Karthik V
With respect to the report, I feel it's painting a slightly too optimistic picture. "Historically strong" growth sounds good, but if input costs are rising at the fastest pace in years, how long can companies absorb them? Job growth today might be at risk tomorrow if margins get squeezed too much.
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Nisha Z
The fact that suppliers can deliver materials on time is a huge, underrated win. A few years ago, supply chains were a mess. This efficiency is what will help us compete globally, especially when demand picks up again.

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