India’s business activity ended FY25 on a strong note, with the manufacturing sector posting a robust expansion in sales and production during March, driven by a rising demand for goods. Hiring, too, increased during the month, according to the HSBC Flash India survey released on Monday.
The HSBC Flash India Composite Output Index was stable at 58.6 in March compared to February’s final reading of 58.8. The latest figure was above its long-run average of 54.7 and continued to indicate a strong growth.
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The HSBC Flash India Manufacturing PMI increased from 56.3 in February to 57.6 in March, signalling a notable improvement in operating conditions that was broadly aligned with the average for FY25. Three of its five main sub-components — output, new orders and stocks of purchases — rose since last month, the survey showed.
Private sector companies attributed the increase in production mainly to positive demand trends. New orders rose further, stretching the current phase of expansion to over three-and-a-half years.
Goods producers indicated a quicker increase than in February, and one that was above the growth rate recorded for service providers. Among the latter, the pace of expansion was the second-slowest since November 2023 as firms noted an intensification of competitive pressures.
Order book volumes at Indian private sector companies continued to be supported by international sales. New export order growth eased to a three-month low, but remained above the average since the series started in September 2014. Manufacturing companies registered a faster upturn in new business from abroad than their services counterparts.
Outstanding business volumes across India’s private sector increased during March. The rate of accumulation slowed from February, however, and was mild overall. There were softer increases in both the manufacturing and service categories.
Nevertheless, efforts to stay on top of workloads and fulfil rising demand needs prompted private sector companies to hire extra staff in March. For the first time in seven months, manufacturers signalled a faster increase in headcounts than service providers.
The aggregate rate of inflation remained below its long-run average. Prices charged for Indian goods and services rose at the weakest rate since February 2022..
Business confidence remained strongly positive in March, but fierce competition featured as the main worry among survey participants in the qualitative part of the survey. Both manufacturers and service providers were slightly less upbeat towards output prospects than in February, said the HSBC survey.
