India's Manufacturing Hits 16-Year High at 59.1 PMI

New Delhi: With the stellar performance in production as well as new orders since October 2020, India's manufacturing activity continued to expand in March 2024 as the HSBC Purchasing Managers’ Index or PMI climbed to a 16-year high of 59.1 in the same month from 56.9 in the month of February this year, reflecting stronger growth of renewed job creation in the country, a private monthly survey showed on Tuesday.

In the PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction. The survey also showed that it is the 33rd consecutive month in the final month of the financial year 2023-24 as the growth quickened across consumer, intermediate and investment goods sectors. Besides, companies also stepped up hiring in response to strong output and new orders.

Commenting on the survey, Ines Lam, economist at HSBC, said that India’s March manufacturing PMI rose to its highest level since 2008. “Manufacturing companies expanded hiring in response to strong production and new orders. On the back of strong demand and a slight tightening in capacity, input cost inflation picked up in March,” Lam said.

The survey further showed that inflows of new work strengthened from both domestic and export markets. New export orders increased at the fastest pace since May 2022. “Quantities of purchase increased at the quickest rate since mid-2023, and one that was among the strongest in nearly 13 years, as companies sought to build up stocks in advance of expected improvements in sales,” the survey said.

On the job front, it further said that after leaving payroll numbers broadly unchanged in the previous two months, manufacturers in India took on additional workers in March. “The pace of job creation was mild, but the best since September 2023. However, customer retention remained a priority for goods producers who raised their charges to the least extent in over a year, the survey said.

On the price front, it said that despite remaining modest by historical standards, cost pressures were at their highest in five months. “Companies reported having paid more for cotton, iron, machinery tools, plastics and steel. Besides, companies remained confident on an average, with 28 per cent forecasting output growth in the year ahead and 1 percent expecting a contraction,” it added.