The increase was led by manufacturing output, which rose to its highest level of 63.5 in nearly three and a half years from 60.7 in February. Manufacturing PMI, which represents private activity in the sector, rose to 59.2 compared with 56.9 in the previous month.
“New orders rose at a faster pace than in the previous month, and within that both domestic and export orders showed improved vigour,” said Pranjul Bhandari, chief India economist, HSBC. Services expansion was tad slower at 60.3 compared with 60.6 in the previous month.
The Flash PMI records 75-85% of the 400 responses each by services and manufacturing firms. The final manufacturing PMI will be released on April 2 and the services and composite PMI on April 4.
Stronger than expected performance of the manufacturing sector bodes well for the last quarter numbers and may lift GDP growth higher than the government estimate of 7.6% in FY24.
Reserve Bank of India Governor, in an interview last month, had noted that FY24 growth may be near 8%.The Indian economy expanded at 8.2% in the first nine months of the year, helped by double digit growth in manufacturing and investment over the last two quarters.Economists and international agencies have revised their FY25 growth forecasts on the back of strong performance.
“The Flash PMI survey pointed to a renewed improvement in business optimism during March. Underpinning greater positivity were expectations that marketing efforts will bear fruit and that economic conditions will remain conducive to growth,” the survey noted.
There was some positive news on the employment front as well, with the pace of job creation fastest in six months.
However, on the inflation front there was rise in both input and output costs, with the rate of increases highest in over five months for manufacturers and service providers.
“Input prices grew at a faster pace in March, and all the increase was not passed on to output prices, leading to some softening in composite margins,” Bhandari said.
