India Manufacturing PMI Slows to Four-Year Low in March Amid Rising Costs and Global Uncertainty

India Manufacturing PMI Slows to Four-Year Low in March Amid Rising Costs and Global Uncertainty​

New Delhi, April 2: India’s manufacturing sector growth moderated sharply in March, with the Purchasing Managers’ Index (PMI) slipping to its lowest level in nearly four years, reflecting mounting cost pressures, global uncertainty, and softer demand conditions.

PMI Drops to 53.9, Weakest Since June 2022​

The seasonally adjusted HSBC India Manufacturing PMI declined to 53.9 in March, down from 56.9 in February, marking the weakest improvement in overall business conditions since June 2022.

A PMI reading above 50 indicates expansion, while a figure below 50 signals contraction.

Slower Growth in Orders and Output​

The report highlighted that new orders and output, the two key components of the index, expanded at their slowest pace since mid-2022. Growth was impacted by challenging market conditions, rising input costs, and disruptions linked to the ongoing Middle East conflict.

According to HSBC, these factors contributed to weaker demand trends and heightened uncertainty among manufacturers.

Rising Input Costs Intensify Pressure​

Manufacturers faced the sharpest increase in input costs since August 2022, with prices rising across a wide range of raw materials including aluminium, chemicals, fuels, jute, leather, fabric, oil, rubber, and steel.

Despite this surge, companies largely absorbed higher costs, resulting in a relatively modest increase in output prices. The rate of output price inflation eased to a two-year low, as firms focused on retaining customers and attracting new business.

Export Demand Strengthens​

In contrast to domestic softness, external demand remained resilient, with Indian manufacturers recording the strongest growth in export orders since September last year.

Demand improved across multiple regions, including Australia, Brazil, Canada, mainland China, Europe, Japan, the Middle East, Turkey, and Vietnam.

Employment and Outlook Show Improvement​

The survey also noted a rise in employment levels, marking the fastest pace of job creation in seven months. Additionally, manufacturers expressed increased optimism about production prospects over the coming year, indicating confidence despite near-term challenges.

Survey Methodology​

The HSBC India Manufacturing PMI is compiled by S&P Global, based on responses from approximately 400 purchasing managers across the manufacturing sector.