India March factory activity expands at its fastest pace in eight months, PMI shows
India's manufacturing activity expanded at the fastest pace in eight months in March, rebounding from a more than one-year low due to strong domestic demand, while output inflation declined to its lowest in a year, a private survey showed on Wednesday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, bounced to 58.1 in March from 56.3 in February, higher than a preliminary estimate of 57.6 and firmly above 50.0 which separates growth from contraction.
Both new orders - a key gauge of demand - and output increased at their quickest rate since July. But export orders expanded at the slowest pace in three months, suggesting slowing global demand.
"Strong demand prompted firms to tap into their inventories, causing the fastest drop in finished goods stocks in over three years. Business expectations remained fairly optimistic," said Pranjul Bhandari, chief India economist at HSBC.
Around 30% of survey participants expected higher output over the coming year, compared with less than 2% anticipating a contraction.
That encouraged firms to continue expanding their workforce, albeit at a slower pace.
Although factories faced higher input costs with inflation accelerating to a three-month high, output price inflation slowed to its weakest level in a year.
India retail inflation fell below the Reserve Bank of India's (RBI) medium-term 4% target in February for the first time in six months. The central bank was expected to deliver another rate cut on April 9, a Reuters poll showed.
