India's Manufacturing Activity Hit Three-Month High In March

India's manufacturing sector displayed quick expansion in March due to increased productivity and new orders.

However, companies cut jobs for the first time in over a year, according to a private business survey released on Monday (3 April).

Input cost inflation fell, while output recorded the strongest growth since December 2022.

S&P Global's Manufacturing "PMI" rose to 56.4 in March, exceeding February's 55.3, and remained above the 50-point level indicating growth for 21 consecutive months.

"PMI" is short for Purchasing Managers' Index. According to S&P Global, PMI is a survey-based economic indicator designed to provide a timely insight into business conditions.

The job market contracted for the first time in 13 months, but job losses were minimal. Concerns around competitiveness and inflation caused a decline in optimism about future output, hitting an eight-month low.

India's economy, ranked third in Asia, may fare better than others amid a potential global downturn with projected growth rates of 6.9 per cent this fiscal year and 6 per cent in the next.

Overall demand rose last month, per new orders sub-index, with a faster expansion of foreign demand compared to February.

Input cost inflation decreased to the second-lowest level in 2.5 years, but companies did increase output prices (cost to customers) due to higher labour and raw material expenses, which resulted in a rise in the output prices sub-index to 52.0 from 51.8.

As a result, retail inflation is projected to remain high in the upcoming months, with an anticipated average of 6.7 per cent for this fiscal year, gradually decreasing to 5.2 per cent in the next, still exceeding the Reserve Bank of India's 4 per cent target, according to a Reuters poll.