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Manufacturing sector conditions in India continued to improve sharply in March despite some loss of growth momentum, according to the latest IHS Markit Manufacturing PMI released on Monday.
Firms scaled up production and input buying in line with another upturn in sales but employment decreased due to coronavirus disease (Covid-19) restrictions and a lack of pressure on capacity. On the price front, the rate of input cost inflation was among the strongest seen over the past three years. However, selling prices increased only moderately as companies limited their adjustments to retain a competitive edge and boost sales. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI)) fell from 57.5 in February to a seven-month low of 55.4 in March. However, the latest reading was indicative of a substantial improvement in the health of the sector that outpaced the long-run series average. Goods producers indicated that strengthening demand and the receipt of orders in bulk underpinned a further rise in overall sales. The upturn was the eighth in successive months and sharp, despite softening to a seven-month low. Similarly, factory production expanded at a sharp albeit slower pace. Those companies that signalled growth mentioned higher new work intakes. The upturn was reportedly restricted by the Covid-19 pandemic. New export orders increased further in March, stretching the current sequence of growth to seven months. Here there was an acceleration in the rate of expansion. Amid efforts to lift safety stocks and support the increase in production requirements, manufacturers purchased additional inputs during March. The rate of growth was marked and outpaced its long-run average but eased from February's near-decade high. Anecdotal evidence suggested that the upturn was stymied by elevated cost pressures. "While predictions that the vaccination programme will curb the disease and underpin output growth in the year ahead meant that business confidence remained positive, growing uncertainty over the near-term outlook due to a rise in Covid-19 cases dragged sentiment to a seven-month low," said Pollyanna De Lima, Economics Associate Director at IHS Markit. "With Covid-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April," she said. The IHS Markit India Manufacturing PMI is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size based on contributions to GDP. IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government. (ANI)
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