Manufacturing sector growth rate at highest level in 16 years due to increase in demand and new orders, PMI reaches 59.1

Manufacturing sector growth reached its highest level in 16 years in March following a pick-up in demand and the strongest growth in production and new orders since October 2020. The HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to a 16-year high of 59.1 in March from 56.9 in February.

In the language of the Purchasing Managers' Index (PMI), an index above 50 indicates expansion while below 50 indicates contraction. HSBC economist Ines Lam said, "India's March manufacturing PMI reached its highest level since 2008. Manufacturing companies expanded hiring following strong output and new orders. Due to strong demand and a slight tightening in capacity, "Input cost inflation accelerated in March."

The manufacturing sector's output increased in March for the 33rd consecutive month, marking the biggest increase since October 2020. The consumer, intermediate, and investment goods sectors all saw growth during this time. There was a steady influx of new work from both the domestic and international markets. According to the survey, new export orders expanded at their quickest rate since May 2022. The strongest purchase volumes in almost 13 years occurred, rising at the quickest rate since mid-2023.

Regarding employment, following two months of essentially flat payrolls, India's manufacturing sector added workers in March. According to the survey, although the rate of job creation remained modest, it was at its highest level since September 2023.

In March, cost pressure on businesses was still at its highest point in five months. Companies reported paying more for cotton, iron, machinery equipment, plastics and steel.