India’s manufacturing sector recorded a significant expansion in March, as per a private business survey. The Manufacturing Purchasing Managers’ Index (PMI) increased to 56.4 in March, up from February’s 55.3, which is the quickest pace in three months. The expansion was attributed to improved output and new orders.
However, firms shed jobs for the first time in over a year. Though the job shedding was minimal, the pace of contraction increased. The input cost inflation saw a reduction, but output grew at the strongest pace since December. The new orders sub-index rose, indicating an overall rise in demand, and foreign demand expanded faster than in February.
Nevertheless, firms did pass on some of the increased labour and raw material costs to customers, leading to elevated retail inflation over the coming months. Additionally, firms showed concerns regarding competitiveness and general inflation, leading to a dip in optimism about future output. Despite these challenges, the Indian economy is projected to grow 6.9% this fiscal year and 6.0% next year.