Factory output grows slowest since Sept 2021
NEW DELHI: India’s manufacturing sector activities moderated in March with companies reporting softer expansions in new orders and production as inflation concerns dampened business confidence, a monthly survey said on Monday.
The seasonally-adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) was 54 in March, down from 54.9 in February, highlighting the weakest rate of growth in production and sales since September 2021. A print above 50 means expansion while a score below 50 denotes contraction.
The March PMI data pointed to an improvement in overall operating conditions for the ninth straight month.
“Manufacturing sector growth in India weakened at the end of fiscal year 2021/22, with companies reporting softer expansions in new orders and production,” said Pollyanna De Lima, economics associate director at S&P Global.
On the price front, manufacturers reported another increase in input prices at the end of fiscal year 2021-22. Chemical, energy, fabric, foodstuff, and metal costs were all reportedly higher in March than in February.
“Goods producers signalled higher prices paid for chemicals, energy, fabric, foodstuff, and metals, despite supplier performance worsening to the least extent in almost a year,” Lima said.
Output prices rose in March as goods producers sought to share part of the additional cost burden with clients.
“For now, demand has been sufficiently strong to withstand price hikes, but should inflation continue to gather pace we may see a more significant slowdown, if not an outright contraction in sales,” Lima said.
Companies appeared very concerned about price pressures, which was a key factor dragging down business confidence to a two-year low, according to Lima.
The March data pointed to subdued optimism towards growth prospects among Indian manufacturers, with the overall level of sentiment slipping to a two-year low. “Anecdotal evidence indicated that inflation concerns and economic uncertainty dampened overall confidence,” the survey said.
Meanwhile, there was a renewed decline in new export orders received by Indian goods producers, ending an eightmonth sequence of growth.
On the employment front, there was a broad stabilisation in headcounts across the manufacturing industry, following three successive months of job shedding. Companies indicated that payroll numbers were sufficient to cope with current requirements.