India's Business Activity for FY 2023-24 Ends On High Note, HSBC PMI Surges To 59.2 In March
With the strongest increase in private sector output for eight months, India's business activity ended this fiscal year on a high note as India's HSBC flash manufacturing Purchasing Managers' Index or PMI surged to 59.2 in March from 56.9 in February. Besides, India's flash composite PMI also rose to an eight-month high of 61.3 in March, up from 60.6 last month. Both the services and composite PMIs are above the level of 50 for the 32nd consecutive month, a private survey showed on Thursday.
As per the survey, the manufacturing industry led the upturn with the fastest expansions in factory orders and production in nearly three-and-a-half years in the same month. At 59.2, the manufacturing PMI is at its highest since February 2008, when it had come in at 59.5, and above the key level of 50 - which separates expansion in activity from contraction - for the 33rd month in a row. However, the survey showed that buoyant demand conditions fuelled growth, with aggregate sales rising at a sharp and accelerated pace.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC, said that the composite output index rose quickly, led by the strongest manufacturing output in nearly three-and-a-half years. "New orders rose at a faster pace than in the previous month, and within that both domestic and export orders showed improved vigour. Input prices grew at a faster pace in March, and all the increase was not passed on to output prices, leading to some softening in composite margins," Bhandari said.
The survey also showed that pressure on operating capacities intensified, highlighted by a quicker uptick in backlogs, which in turn supported job creation. "Meanwhile, favourable demand trends pushed inflationary pressures higher, with both input costs and output charges increasing to greater extents. Service providers noted a sharp increase in business activity that was broadly similar to February, while manufacturers recorded the strongest upturn in production since October 2020," the survey showed.
According to survey participants, efficiency gains and robust consumer appetite, alongside investment in technology and favourable market conditions, spurred sales. "New business intakes at the composite level rose for the thirty-second straight month in March. Private sector companies in India also recorded a pick-up in price pressures during March, with both input costs and output charges increasing at stronger rates. Amid reports of higher prices for food, metals and plastics, overall cost burdens rose to the greatest extent in seven months," the survey showed.
In line with the trend for input costs, the survey also noted that services companies signalled a faster increase in output prices than goods producers. "Charge inflation slipped to a 13-month low in the manufacturing industry, but quickened to an 80-month high in the service economy. At the composite level, the latest rise was marked and the fastest since last October," the survey pointed out, showing a renewed improvement in business optimism during March.
