India's Growth Slows in March as Energy Shock Hits Manufacturing, Services

The PMI Composite Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - stood at 56.5 in March.

"Softer domestic demand weighed on new orders, which rose at the slowest pace in more than three years, despite a record surge in new export orders. Cost pressures intensified, but companies are absorbing part of the increase by squeezing margins," said Pranjul Bhandari, Chief India Economist at HSBC.

Companies indicated that the Middle East war, unstable market conditions and inflationary pressures all dampened growth. Input costs and selling charges increased at the fastest rates in 45 and seven months, respectively.

There were softer increases in new orders placed with manufacturing companies and their services counterparts. Collectively, sales rose at the slowest pace since November 2022, showed the data compiled by S&P Global.

Outstanding business volumes at the composite level rose for the fourth successive month in March, but the pace of accumulation was only marginal.

Manufacturing-specific data showed further increases in buying levels and stocks of purchases at the end of the last fiscal quarter. In both cases, however, rates of expansion eased from February.

In terms of delivery times, companies reported a marked improvement in vendor performance.

"Firms absorbed a large part of their additional cost burdens, as indicated by a rise in selling prices that trailed that of input costs by a considerable margin. Nonetheless, the rate of charge inflation was marked and the strongest in seven months," said the PMI data.

The Indian private sector firms were optimistic of an increase in output levels over the course of the coming 12 months. Efficiency enhancements, marketing campaigns and new client enquiries were some of the reasons companies gave for their positive assessments.

- IANS