Home ›› 05 Apr 2022 ›› Asia Biz
India’s factory activity expanded at a slower pace in March as rising prices meant new orders and output grew at their weakest rate since September, according to a survey released on Monday that also showed optimism at a two-year low.
The survey provides the latest evidence the recovery in Asia’s third-largest economy is slowing. Hikes in oil prices, primarily driven by uncertainties around the Russia-Ukraine war, have already taken a toll on consumer spending - the biggest contributor to GDP growth.
Compiled by S&P Global, the Manufacturing Purchasing Managers’ Index (INPMI=ECI) declined to 54.0 in March from 54.9 in February. However, it has remained above the 50-level separating growth from contraction for nine straight months.
Despite that decline, the sector had its best annual fiscal year performance since FY 2011/12.
“Manufacturing sector growth in India weakened at the end of fiscal year 2021/22, with companies reporting softer expansions in new orders and production,” noted Pollyanna De Lima, economics associate director at S&P Global.
“The slowdown was accompanied by an intensification of inflationary pressures, although the rate of increase in input costs remained below those seen towards the end of 2021.”
Sub-indexes tracking new orders and output were at six-month lows and foreign demand contracted for the first time since June 2021, highlighting a weakening global economic recovery and a slowdown in China.
But factories increased headcount for the first time in four months.
Still, rising cost pressures remained one of the main concerns as firms faced a faster increase in input prices last month, forcing them to transfer some of that burden to consumers. Output prices rose at the quickest rate in five months.
