India's Manufacturing Sector Leads Overall Private Sector Growth

The HSBC Flash India PMI data showed the strongest increase in private sector output for eight months during March, amid a pick-up in growth at goods producers. Buoyant demand conditions fuelled growth, with aggregate sales rising at a sharp and accelerated pace. The manufacturing industry led the upturn with the fastest expansions in factory orders and production in nearly three-and-a-half years.

Pressure on operating capacities intensified, highlighted by a quicker uptick in backlogs, which in turn supported job creation. Meanwhile, favourable demand trends pushed inflationary pressures higher, with both input costs and output charges increasing to greater extents.

At 61.3 in March, the headline HSBC Flash India Composite PMI Output Index a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors was inside growth territory for the thirty-second month running. Moreover, rising from 60.6 in February, the latest figure indicated a sharp rate of expansion that was the strongest since July 2023.

 

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. According to survey participants, efficiency gains and robust consumer appetite, alongside investment in technology and favourable market conditions, spurred sales.

Private sector companies in India recorded a pick-up in price pressures during March, with both input costs and output charges increasing at stronger rates. In line with the trend for input costs, services companies signalled a faster increase in output prices than goods producers.

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