India’s manufacturing Purchasing Managers’ Index (PMI) decreased to 53.9 in March due to global economic disruptions from the Middle East conflict, impacting Indian manufacturers, as per HSBC Flash India PMI data. Companies faced increased cost pressures, with the steepest rise since August 2022. Despite this, firms managed to absorb the additional expenses, leading to a slight rise in selling charges, the smallest in two years, according to S&P Global’s PMI data.
Efforts to build contingency stocks aided job creation and growth in input purchases. Output and new orders experienced a notable slowdown, indicating softer demand and increased uncertainty. Input costs surged significantly across various items like aluminium, chemicals, and fuels. However, companies are currently absorbing much of the cost hike, thereby keeping output prices relatively stable, stated Pranjul Bhandari, HSBC’s Chief India Economist.
In March, input prices saw the most substantial increase in over three-and-a-half years, with various items such as aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber, and steel witnessing price hikes. Indian manufacturers continued to procure additional materials for production processes and inventory expansion. The growth rate slightly slowed to a three-month low but remained robust historically, driven by sales growth and operational efficiency efforts, as highlighted in the report.
Notably, suppliers efficiently delivered materials to Indian manufacturers, with a notable improvement in vendor performance. Indian manufacturers recorded the strongest growth in external sales since September, with increased sales to clients in countries like Australia, Brazil, Canada, China, Europe, Japan, the Middle East, Turkey, and Vietnam. Additionally, companies boosted employment to the highest level in seven months and expressed increased optimism about future production, according to the report.
