New Delhi, Apr 2 (KNN) India’s manufacturing sector witnessed a moderation in growth in March, as rising cost pressures, weak demand conditions, and global uncertainties weighed on output and new orders, according to the latest HSBC India Manufacturing PMI (purchasing managers’ index) data.
The conflct in West Asia involving Iran, Israel and the US seems to have started taking toll on the economy.
The seasonally adjusted PMI fell to 53.9 in March from 56.9 in February, marking the slowest expansion in nearly four years and slipping below the long-term average of 54.2.
Cost Pressures Surge to Multi-Year High
The survey compiled by S&P Global said that input cost inflation rose sharply in March, reaching its highest level since August 2022, driven by increased prices of key raw materials such as aluminium, chemicals, fuel, rubber, steel, fabric, and oil.
Despite this, manufacturers showed restraint in passing on higher costs. Output price inflation rose only modestly, recording the weakest increase in two years, as firms prioritised customer retention amid competitive pressures.
Demand Softens, Output Growth Slows
Both new orders and production expanded at their slowest pace since mid-2022, reflecting softer demand conditions, heightened market uncertainty, and the ongoing conflict in the Middle East.
The report noted that challenging global conditions and rising input costs constrained growth momentum across the sector.
Inventory Build-Up and Hiring Support Activity
Manufacturers continued to increase input purchases and build inventories, although the pace slowed to a three-month low. The accumulation of pre-production inventories remained strong, supported by efforts to maintain buffer stocks and ensure supply continuity.
Employment levels improved, with firms expanding workforce at the fastest rate in seven months, partly driven by stock-building and operational stability needs.
Exports Provide Some Relief
In a positive development, export orders recorded the strongest growth since September, with demand seen from markets including Australia, Brazil, Canada, China, Europe, Japan, the Middle East, Turkey, and Vietnam.
Outstanding business volumes declined for the first time in nearly 18 months, supported by increased hiring and slower order inflows, enabling firms to clear pending work.
Despite current challenges, manufacturers remained optimistic about future output, indicating confidence in demand recovery over the coming year.
The data suggests that while India’s manufacturing sector continues to expand, rising cost pressures and global uncertainties are beginning to weigh on growth momentum, with firms balancing between maintaining margins and sustaining demand.
(KNN Bureau)
