India’s Manufacturing PMI Hits 8-Month High of 58.1 in March Amid Strong Order Growth

India’s manufacturing activity rebounded in March, reaching an eight-month high of 58.1, up from 56.3 in February, according to data released by S&P Global on Wednesday. The latest figures indicate a significant improvement in the sector's health, surpassing its long-term average. The growth was primarily driven by a surge in new orders, with the new orders index hitting an eight-month high of 61.5. March also saw the strongest expansion in total sales since July 2024, as companies attributed the increase to strong customer interest, favorable demand conditions, and effective marketing efforts.

India’s manufacturing activity was recorded at 58.1 in March. (Photo: Pexels)

Pranjul Bhandari, HSBC's Chief India Economist, stated, “India registered a 58.1 manufacturing PMI in March, up substantially from 56.3 during the previous month. Although international orders slightly slowed, overall demand momentum remained robust, and the new orders index recorded an eight-month high of 61.5. Strong demand prompted firms to tap into their inventories, causing the fastest drop in finished goods stocks in over three years. Business expectations remained fairly optimistic, with around 30 per cent of survey participants foreseeing greater output volumes in the year ahead, compared to less than 2 per cent that anticipate a contraction.”

Towards the end of the 2024/25 fiscal year, firms ramped up production volumes. The expansion rate was significant, surpassing historical averages and marking the highest growth in eight months. While new export orders remained strong in March, S&P Global noted that the growth rate slowed to a three-month low. Panelists attributed international sales growth primarily to gains in Asia, Europe, and the Middle East.

Status update on pre- and post-production inventories

According to survey results, post-production inventories experienced their most significant drop in over three years, as several companies reported utilizing stored goods to meet growing sales demands. This marked the fourth consecutive monthly decline and was a notable overall decrease. To prevent stockouts, Indian manufacturers increased their purchasing activities in March, with inputs being bought at the highest rate in seven months and significantly above the average for the series.

S&P Global reported that despite the rise in input demand, suppliers to India's manufacturing sector generally managed to deliver materials on time. Lead times shortened for the thirteenth consecutive month, although at the second-slowest pace in this period. Additionally, pre-production inventories saw a sharp increase in March, rising at the fastest pace in five months.

The month also witnessed a solid rate of hiring, with employment increasing according to survey data. Amid reports of rising prices for copper, electronic items, leather, LPG, and rubber, cost pressures intensified. Overall inflation rose to a three-month high but remained well below its long-term average. On the other hand, the increase in prices for goods sold by Indian manufacturers was moderate, marking the slowest rise in exactly one year. Finally, strong demand conditions, improved customer relationships, and pending project approvals contributed to positive output forecasts for the next 12 months.

(This Article was originally published by Financial Express)