India's Manufacturing Roars: Scaling Heights with 16-Year PMI High in March

The seasonally adjusted HSBC India Manufacturing PMI surged to an impressive 59.1 in March, up from 56.9 in February. This notable improvement underscores the sector's resilience and growing momentum. The latest data reveals a robust surge in the HSBC India Purchasing Managers' Index . reaching a 16-year high in March. A reading above 50 shows signs of expansion in the sector and a reading below 50 shows a sign of contraction.

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Key Drivers of Growth:

1. Strong Increase in Output and New Orders: The upturn in output and new orders is the most pronounced since October 2020, reflecting buoyant demand conditions both domestically and from export markets.

2. Buoyant Demand Conditions: Growth of new orders accelerated significantly, driven by robust demand conditions, with notable increases from both domestic and export markets. Export orders recorded the fastest pace since May 2022.

3. Expansion Across Sectors: Manufacturing output expanded for the thirty-third consecutive month, with growth across consumer, intermediate, and investment goods sectors. Investment goods makers experienced the steepest expansion in production.

4. Increase in Purchasing Activity: Companies ramped up purchasing activity, indicating confidence in future sales prospects. Quantities of purchases increased at the quickest rate in nearly 13 years, with inventories of purchases expanding to the second-greatest extent in survey history.

5. Renewed Job Creation: After maintaining stable payrolls in the previous months, manufacturers increased hiring in March. The pace of job creation, though moderate, marked the highest since September 2023.

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Challenges and Cost Pressures: 

While the overall outlook is positive, challenges persist. Cost pressures saw a mild uptick, with companies reporting increased expenses for key inputs like cotton, iron, machinery tools, plastics, and steel. However, efforts to retain customers restrained firms from significant price hikes.

Mixed Outlook:

The outlook for the Indian manufacturing sector presents a mixed picture. While 28% of companies foresee output growth in the year ahead, concerns about inflation weighed on overall sentiment, leading to a slight decline from the previous months.



Despite challenges, India's manufacturing sector has demonstrated resilience and vigour, achieving commendable growth momentum. With buoyant demand, increased purchasing activity, and renewed job creation, the sector remains a vital contributor to India's economic landscape, poised for further expansion in the coming months.

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