Great news for India’s manufacturing sector! According to data released on April 3, the S&P Global Purchasing Managers’ Index (PMI) for March came in at 56.4, which is a three-month high and a clear indication of expansion in activity. This marks the 21st consecutive month of 50-plus PMI readings for the sector.
In a statement, S&P Global noted that growth of factory orders and production quickened to the strongest in three months, and firms reported that marketing efforts bore fruit, while demand resilience and competitive pricing were cited as growth drivers. Foreign demand for Indian goods also rose in March, with new export orders increasing.
While policymakers have been focused on the services sector recently, the robust manufacturing PMI data will definitely put them in a good mood. As a matter of fact, it comes just after government data showed that India’s total Goods and Services Tax collections rose to Rs 1.6 lakh crore in March, which is the second-highest level since the new indirect tax regime was introduced in July 2017.
Even though input cost inflation eased to its second-lowest level in two-and-a-half years, there was only mild pressure on capacity, according to the S&P Global survey. While job creation was hindered due to pending workloads expanding only marginally in March, manufacturers added to their inventory of raw materials and semi-finished items at one of the highest rates in more than 18 years.
As for selling prices, they increased further in March, with several panellists reportedly leaving their fees unchanged in a bid to boost sales. However, India is still battling high retail inflation levels, with the Consumer Price Index (CPI) inflation at 6.44 percent in February. This has raised expectations of another repo rate hike by the Reserve Bank of India’s Monetary Policy Committee, which is set to announce its interest rate decision later this week on April 6.
Overall, this is fantastic news for India’s manufacturing sector and we can’t wait to see what the future holds!
In the meanwhile, if you’re interested in the manufacturing Sector, do check out Omkara’s manufacturing smallcase.