The HSBC Flash India composite Purchasing Managers’ Index (PMI) rose to an eight-month high of 61.3 in March from 60.6 in February, amid buoyant demand conditions, which fuelled growth and accelerated aggregate sales, S&P Global said on Thursday.
“Led by the strongest manufacturing output in nearly three-and-a-half years, the composite output index rose quickly. New orders rose at a faster pace than in the previous month, and within that both domestic and export orders showed improved vigour,” said Pranjul Bhandari, Chief India Economist at HSBC.
Service providers noted a sharp increase in business activity that was broadly similar to February, while manufacturers recorded the strongest upturn in production since October 2020, S&P Global said. “According to survey participants, efficiency gains and robust consumer appetite, alongside investment in technology and favourable market conditions, spurred sales,” it said.
The Flash India composite PMI is a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors. Flash data are calculated from 80-90% of total responses of surveyed firms and are intended to provide an accurate early indication of the final data – released during the first week of the month.
The index has been compiled by questionnaires sent to survey panels of around 400 manufacturers and 400 service firms. Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A reading above 50 denotes expansion in activity, while a reading below means contraction.
During March, new export orders across the private sector expanded at the fastest pace in seven months, with quicker increases evident at both manufacturing firms and their services counterparts. Anecdotal evidence highlighted gains from Africa, Asia, Australia, Europe, the Middle East and the US, S&P Global said.
Indian manufacturers scaled up input purchasing in March. Buying levels rose at a substantial pace that was the strongest in nine months. This aided firms’ restocking efforts, with input inventories expanding at the fastest rate since May 2023, said the global ratings agency.
On the inflation front, private sector companies recorded a pick-up in price pressures during March, with both input costs and output charges increasing at stronger rates. Amid reports of higher prices for food, metals and plastics, overall cost burdens rose to the greatest extent in seven months, S&P Global said. “Anecdotal evidence also highlighted labour and transportation costs as sources of inflation.”
As a result, firms passed on the price rise to output charges, with services’ companies signalling a faster increase in output prices than goods producers.
The Flash PMI survey pointed to a renewed improvement in business optimism during March. Underpinning greater positivity were expectations that marketing efforts will bear fruit and that economic conditions will remain conducive to growth, said S&P Global.
