PMI Data: India's Manufacturing Faces Rising Costs, Strong Job Growth

India Manufacturing PMI Eases to 53.9 in March Amid Global Disruptions and Rising Input Costs​

New Delhi, April 2: India’s manufacturing activity showed signs of moderation in March, with the Purchasing Managers’ Index (PMI) easing to 53.9, as global disruptions linked to the ongoing Middle East conflict weighed on business sentiment and demand, according to HSBC Flash India PMI data released on Thursday.

Demand Softens as Output Growth Slows​

The latest data highlighted a noticeable slowdown in both output and new orders, pointing to softer demand conditions and rising uncertainty among manufacturers. Despite the moderation, the overall pace of expansion remained historically strong, though it slipped to a three-month low.

Pranjul Bhandari, Chief India Economist at HSBC, noted that the deceleration reflects emerging demand pressures amid global economic volatility.

Input Costs Surge to Multi-Year High​

A key concern for manufacturers was the sharp increase in input costs, which rose at the fastest pace in over three-and-a-half years. The surge was driven by higher prices across a wide range of commodities, including aluminum, chemicals, fuel, jute, leather, fabric, oil, rubber, and steel.

Despite the rising cost burden, companies largely chose to absorb these increases. Selling prices saw only a modest rise, marking the slowest pace of increase in two years, indicating limited pass-through to end consumers.

Inventory Build-Up and Hiring Support Activity​

Manufacturers continued to increase their purchase of raw materials, both to sustain production and build contingency inventories. This trend supported growth in input buying and also contributed to job creation, with employment rising at the fastest rate in seven months.

The report also pointed to improved supplier performance, with vendors delivering inputs more efficiently, helping firms maintain stable operations despite external challenges.

Export Demand Remains a Bright Spot​

In a positive development, external demand showed resilience. Indian manufacturers recorded the strongest growth in export orders since September, with demand coming from key markets such as Australia, Brazil, Canada, China, Europe, Japan, the Middle East, Turkey, and Vietnam.

Outlook Remains Optimistic​

Despite near-term challenges, manufacturers expressed improved optimism about production in the year ahead. Businesses cited continued sales growth and proactive measures to ensure operational stability as key factors supporting confidence.

Overall, while India’s manufacturing sector faced headwinds from global uncertainties and cost pressures in March, underlying indicators such as export growth, hiring activity, and business optimism suggest continued resilience.