Manufacturing activity in India fell marginally in March to 54.0 from 54.9 in February. According to the S&P Global India Manufacturing Purchasing Managers' Index, the fall highlighted the joint-weakest rate growth since September 2021.
While business conditions improved, the latest results showed slower expansions in factory orders and production, as well as a renewed decline in new export orders, according to the report. Inflation concerns dampened business confidence, which fell to its lowest level in two years.
"For the time being, demand has been sufficiently strong to withstand price increases," said Pollyanna De Lima, Economics Associate Director at S&P Global. "However, if inflation continues to rise, we may see a more significant slowdown, if not an outright contraction in sales."
While new orders increased, the rate of expansion slowed to a six-month low. Growth in the areas where it was reported was driven by successful marketing efforts and improved demand conditions. "Rising sales aided another increase in production volumes, the ninth in a row." Despite slowing to its lowest since last September, the rate of expansion was significant and outpaced its long-run average, according to the report.
At the end of fiscal year 2021-22, input prices increased. Chemicals, energy, fabrics, foodstuffs, and metals were all said to be more expensive than in February. The overall rate of inflation increased and exceeded its long-run average, but it was also the second-slowest in six months.
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