India’s business activity concluded this fiscal year on a positive note, with the country experiencing the fastest expansion in eight months in March, according to a business survey. This suggests that India will continue to be the fastest growing major economy. The HSBC’s flash India Composite Purchasing Managers’ Index (PMI), created by S&P Global, increased to 61.3 this month from February’s final reading of 60.6. This marks the 32nd consecutive month of expanding activity, with the 50-mark signaling expansion or contraction on a monthly basis.
The growth was primarily driven by the manufacturing sector, which has been a key economic engine in recent quarters. The index tracking factory activity rose to 59.2, its highest level since February 2008. Demand for factory goods in India remained strong, with new orders expanding at the fastest rate in over three years. Services activity also remained robust, although the index slightly decreased to 60.3 in March from 60.6 in the previous month.
Despite these challenges, companies increased hiring at the strongest rate since September, indicating confidence in future economic conditions. However, there were rising price pressures noted in the survey. Input costs at services firms increased at the fastest rate in seven months, while prices charged saw the sharpest rise since July 2017. Although manufacturers raised prices at the slowest pace in over a year in March, input costs rose faster than in February.
Overall, this data indicates that inflation could remain steady, potentially reducing the likelihood of the Reserve Bank of India cutting interest rates in the near future
