India's Business Activity Hits Eight-Month High In March: PMI

The growth was primarily driven by the manufacturing sector, which has consistently played a pivotal role in the economy in recent quarters

The index monitoring factory activity surged to 59.2, marking its highest level since February 2008, compared to 56.9 recorded in the previous month

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India's business activity concluded the fiscal year on a positive trajectory, marking its fastest expansion in eight months in March, according to a recent business survey. This development suggests the country is poised to maintain its status as the fastest-growing major economy. The latest HSBC flash India Composite Purchasing Managers' Index (PMI), assembled by S&P Global, increased to 61.3 this month, up from February's final figure of 60.6. This marks the continuation of expanding activity for 32 consecutive months, reported the news agency Reuters.

"Led by the strongest manufacturing output in nearly three-and-a-half years, the composite output index rose quickly. New orders rose at a faster pace than in the previous month, and within that, both domestic and export orders showed improved vigour,” said Pranjul Bhandari, chief India economist at HSBC.

The growth was primarily driven by the manufacturing sector, which has consistently played a pivotal role in the economy in recent quarters. The index monitoring factory activity surged to 59.2, marking its highest level since February 2008, compared to 56.9 recorded in the previous month.

Factory goods demand in Asia's third-largest economy continued to exhibit strength, with new orders experiencing the most rapid expansion in over three years. Concurrently, services activity maintained its robust performance, with a slight easing as the index dipped to 60.3 in March from 60.6 the previous month. 

Moreover, exports displayed notable growth, marking the fastest pace in seven months. This buoyant demand, coupled with expectations of favourable economic conditions in the future, bolstered business sentiment for the upcoming year. 

Furthermore, companies ramped up their hiring efforts at the strongest pace since September. However, overall price pressures heightened this month, with input costs at services firms rising at the swiftest pace in seven months, while prices charged saw the sharpest increase since July 2017.

While the prices charged by manufacturers saw a relatively subdued increase in March, input costs accelerated at a faster pace compared to February. This suggests that overall inflation may persist at elevated levels, potentially reducing the impetus for the Reserve Bank of India to implement interest rate cuts in the near future.