India’s business activity ended the fiscal year on a positive note, with the fastest expansion in eight months in March. This was indicated by HSBC’s flash India Composite Purchasing Managers’ Index (PMI) rising to 61.3, extending the streak of expanding activity to 32 months. The index tracks factory activity and showed that overall exports expanded at the fastest pace in seven months, contributing to business optimism for the coming year and an increase in hiring at the strongest pace since September.
The growth was led by the manufacturing sector, which showed the strongest manufacturing output in nearly three-and-a-half years. New orders rose at a faster pace, with both domestic and export orders showing improved vigor. Services activity also remained strong, although the index eased slightly in March. However, there was an increase in overall price pressures, with input costs rising at the quickest pace in seven months for services firms. Prices charged also saw a sharp rise, while prices charged by manufacturers appreciated at the weakest pace in over a year but input costs rose faster in March compared to February. These developments suggest that overall inflation could remain stable, giving less incentive to the Reserve Bank of India to cut interest rates anytime soon. Despite this, India is likely to remain one of the fastest growing major economies globally.
