The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) dipped to 54 in March from 54.9 in February, with production and sales expanding at their slowest rate in six months and inflation fears driving down business confidence to its lowest level in two years.
A PMI score of 50 implies that business activity has remained constant. The number of new export orders received by Indian goods producers fell slightly in March, halting an eight-month string of rising.
S&P Global: Slowdown accompanied by strengthening Inflationary pressures
“While the rate of increase in input costs remained below that projected towards the end of 2021, the slowdown was accompanied by a strengthening of inflationary pressures,” said Pollyanna De Lima, economics associate director at S&P Global. Chemicals, energy, fabric, foodstuffs, and metals prices were all higher in March than in February, and the total rate of inflation faced by producers accelerated.
“Goods manufacturers sought to pass a portion of the higher input cost burden with customers in March, pushing charge inflation to a five-month high,” according to S&P Global.
“For the time being, demand has been strong enough to withstand price increases, but if inflation continues to rise, we may see a more significant slowdown, if not an outright contraction in sales,” said Ms. De Lima, economics associate director at S&P Global, noting that the latest PMI shows India’s manufacturing sector growth slowed in the final month of the fiscal year.
The manufacturing sector showed ‘a wide stabilization in headcounts’ after three months of job losses, but employers reported that payroll numbers were sufficient to meet present requirements, dampening hopes for new positions.
Inflation fears and economic uncertainty lowered overall confidence, according to anecdotal evidence, the firm said in a note on the Index, which is based on answers from 400 manufacturers and then adjusted for seasonal changes.
In March, additional input purchases climbed at the slowest rate since August 2021, but they were still marked.’ Pre-production inventories, on the other hand, increased for the ninth month in a row, with a greater and faster increase than in February. Supplier restrictions, on the other hand, looked to alleviate, as delivery delays increased by the smallest amount in nearly a year, according to S&P Global.