Manufacturing sector gains momentum

India’s manufacturing sector is seeing fresh momentum, with the manufacturing Purchasing Managers’ Index (PMI) increasing from 56.4 in February to 57.2 in March. Firms are seeing the quickest pace of new orders placed with goods producers since last December, even though job creation was only ‘slight’.


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The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) is a monthly survey that measures the performance of the Indian manufacturing sector. It is based on a survey of purchasing managers from a representative sample of manufacturing companies. The PMI measures factors such as new orders, output, employment, and prices to provide an overall picture of the health of the sector. A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.

India’s manufacturing industry is showing traction with acceleration of factory orders and production growth in the last quarter of the fiscal year, which reached its peak in three months.

  • The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) increased from 56.4 in February to 57.2 in March.
  • The Indian manufacturing sector showed a positive trend in March, with a significant improvement in operating conditions compared to the previous month.
  • This growth was driven by an increase in new orders, with firms seeing the quickest pace of new orders placed with goods producers since last December.
  • The increase indicates the most robust enhancement in operating conditions in 2023 so far.

Firms saw the quickest pace of new orders placed with goods producers since last December, which suggests that demand for manufactured goods has increased in recent times. This growth has likely prompted manufacturing companies to increase their production levels to meet the rising demand.

The overall business sentiment about output prospects a year ahead also improved, as manufacturers gained confidence that volumes will be higher going forward. This improvement in sentiment was further supported by a reversal of the trend in April, as firms sought to expand capacities by taking on additional workers and stockpiling inputs. Although overall job creation was “only slight,” producers saw a record expansion in inventories of inputs in April. Within inputs, raw materials and semi-finished items’ stocks also witnessed a surge.

Resilient Demand and Output Charges

Despite the surge in input stocks, finished products’ stocks depleted at the fastest pace this year, as demand stayed resilient, according to the firms surveyed for the PMI. This resulted in output charges being raised at the sharpest pace in three months. However, only 6% of the surveyed firms raised prices, while 92% of them left prices unchanged from the March level.

Manufacturing sector showed remarkable performance, inflation in input costs accelerated afresh, with manufacturers reporting higher operating costs in April. These cost increases were linked to fuel, metals, transportation, and some other raw materials.

“Reflecting a robust and quicker expansion in new orders, production growth took another step forward in April. Companies also benefited from relatively mild price pressures, better international sales and improving supply-chain conditions,” stated Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

The recent performance of India’s manufacturing sector has been encouraging, with an increase in new orders and production. Despite the challenges posed by the global economic scenario, firms are confident about output prospects a year ahead. However, sustained growth will depend on factors such as global demand, availability of raw materials, and effective management of supply chain disruptions.

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