16-yr high: At 59.1 in March, India's manufacturing PMI highest since 2008

The manufacturing PMI has remained above the 50-mark for more than 30 consecutive months

India's manufacturing sector in March reached its highest level in 16 years, said a widely followed index on Tuesday, with production and sales expanding at their fastest rates since October 2020.

HSBC India Manufacturing PMI was at 59.1 in March when the country recorded a near-record increase in input stocks. PMI, short for purchasing managers index, in February was 56.9, the fastest pace in five months. In January, it was 56.5. The manufacturing PMI has remained above the crucial 50-mark, indicating growth rather than contraction, for 33 consecutive months.

"India’s March manufacturing PMI rose to its highest level since 2008. Manufacturing companies expanded hiring in response to strong production and new orders. On the back of strong demand and a slight tightening in capacity, input cost inflation picked up in March," said Ines Lam, economist at HSBC.

 

"The notable improvement in operating conditions reflected stronger growth of new orders, output and input stocks as well as renewed job creation," said the HSBC India report. Growth can be attributed to a boost in new orders, output, and input stocks, accompanied by renewed job creation.

"Capital goods was the brightest area regarding both input buying and stockpiling."

"After leaving payroll numbers broadly unchanged in the previous two months, manufacturers in India took on additional workers in March. The pace of job creation was mild, but the best since September 2023," said the report.

However, cost pressures reached their highest level in five months. Companies reported increased expenses for essential materials such as cotton, iron, machinery tools, plastics, and steel.

"A very small proportion of panellists opted to increase their selling prices in March (fewer than five per cent), with customer retention efforts preventing several companies from hiking their fees," it said.

The outlook for the Indian manufacturing sector appears to be a "mixed picture". Companies remain generally optimistic, with 28 per cent forecasting output growth in the year ahead, however, concerns over inflation persist.