India Manufacturing PMI at 54 in March; Production and sales expand at slowest rates in 6-months

4 Apr 2022 , 05:00 PM

Business conditions in India improved in March, but the latest results showed slower expansions in factory orders and production as well as a renewed decline in new export orders.

Posting 54.0 in March, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index® (PMI®) signalled a further improvement in the health of the sector. However, falling from 54.9 in February, the latest reading highlighted the joint-weakest rate of growth since September 2021.

Pollyanna De Lima, Economics Associate Director at S&P Global, said: “Manufacturing sector growth in India weakened at the end of fiscal year 2021/22, with companies reporting softer expansions in new orders and production. “The slowdown was accompanied by an intensification of inflationary pressures, although the rate of increase in input costs remained below those seen towards the end of 2021.”

“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. Once again, we saw the transfer of rising cost burdens to clients, with charge inflation at a five-month high. 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. “Companies themselves appeared very concerned about price pressures, which was a key factor dragging down business confidence to a two-year low,” Pollyanna De Lima said.