The manufacturing sector recorded its best show in eight months in March with the purchasing managers index (PMI) rising to 58.1, up from 56.3 in February, according to a set of data compiled by a private agency.
In February, the manufacturing PMI had dropped to a 14-month low of 56.3 due to weaker growth in output and sales, along with a slowdown in input purchasing.
The sharp rise was driven by stronger fresh orders, as the new orders index reached its highest level in eight months, supported by increased customer interest, favourable demand conditions, and successful marketing initiatives, HSBC, quoting the data compiled by S&P Global, said on Wednesday.
HSBC India chief economist Pranjul Bhandari said, “The manufacturing PMI rose to 58.1 in March, up substantially from 56.3 in the previous month, and is an eight-month high. Though international orders slightly slowed, overall demand momentum remained robust, and the new orders index recorded an eight-month high of 61.5.
“Strong demand prompted firms to tap into their inventories, causing the fastest drop in finished goods stocks in over three years. Business expectations remain fairly optimistic, with about 30% of survey participants foreseeing greater output volumes in the year ahead, compared to under 2% who anticipate a contraction.”
In response to stronger new orders, manufacturers scaled up production at a pace above historical averages and tapped into their inventories, leading to the fastest drop in finished goods stocks since January 2022. Companies also increased input purchases at the quickest rate in seven months to secure stocks.
Though international sales growth slowed marginally, demand from Asia, Europe, and the Middle East remained strong. Additionally, business expectation remains optimistic, with around 30% of anticipating firms seeing higher output in the coming year, she said.