Factory activity recovers to eight-month high of 58.1 in March

Manufacturing acitvity for March

India's manufacturing activity recovered in March, ending FY25 at an eight-month high of at 58.1, recovering from a 14-month low of 56.3 in the previous month, a private sector survey data released on April 2 shows.

The HSBC India Manufacturing Purchasing Managers' Index logged its eighth reading of above-57 for the fiscal gone by, as domestic order book improved. For the last quarter, average index value was higher at 57.4 compared with 56.8 in the previous month.

"India registered a 58.1 manufacturing PMI in March, up substantially from 56.3 during the previous month. Although international orders slightly slowed, overall demand momentum remained robust, and the new orders index recorded an eight-month high of 61.5," said Pranjul Bhandari, chief India economist, HSBC.

Auto data released a day earlier showed pick up in consumption, with all automotive majors recorded a strong showing in March. Mahindra & Mahindra reported an 18 percent rise in sales in March over the year-ago period, while tractor manufacturer Escorts Kubota’s sales were up 15 percent.

Two-wheeler sales, an indicator of rural demand, also rose in double digits for most companies.

The goods and services collections also ended the fiscal at an 11-month high of Rs 1.96 lakh crore, while UPI transactions came close to Rs 25 lakh crore.

Coal production, however, was disappointed, ending the year 3.1 percent lower.

The government expects growth to settle at 6.5 percent in FY25. Manufacturing is likely to underperform, falling to 4.3 percent from 12.3 percent in the previous fiscal.

On the inflation front, there was good news, despite companies witnessing a faster pace of increase in prices.

"Amid reports of higher prices for copper, electronic items, leather, LPG and rubber, cost burdens rose further. The overall rate of inflation accelerated to a three-month high, but was well below its long-run average," said the press release.

Charge inflation or prices on final goods rose at the weakest pace in a year, indicating that core inflation is expected to stay contained.

Future outlook also remained rosy with just 2 percent of businesses expecting a contraction.