The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose from 55.3 in February to 56.4 in March, signalling the strongest improvement in operating conditions in 2023 so far. The rate of expansion in March was sharp and the quickest in three months.

A reading above 50 indicates an overall expansion compared to the previous month and a print below 50 shows an overall decrease. The index is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

“Underlying demand for Indian goods remained strong in March, underscored by the quickest upturn in factory orders for three months. Hence, production continued to expand at a robust clip and firms stepped up their stock building efforts,” S&P Global Market Intelligence Economics Associate Director Pollyanna De Lima said.

Companies reported abundant capacity among themselves and their suppliers. Pending workloads expanded only marginally in March, hindering job creation, De Lima said.

Ongoing improvements in total sales volumes underpinned another increase in production. Output rose at the quickest pace since last December and one that outpaced its long-run average. Demand resilience also encouraged firms to rebuild their input inventories.

Another factor that stimulated buying levels was a moderation in cost pressures. March data highlighted the second-weakest increase in input prices in two-and-a-half years, the survey showed.

Although selling prices increased further at the end of the last fiscal quarter, the rate of inflation was moderate and broadly similar to February.

“Firms tried to benefit as much as possible from this moderation in inflation by acquiring additional raw materials and semi-finished items. This contributed to one of the strongest increases in input inventories in over 18 years of data collection,” De Lima added.

The PMI average for the final fiscal quarter (55.7) came in below that recorded in the prior period (56.3 in Q3), the survey said.

It further said that Indian manufacturers expect improved customer relations, new product releases and advertising to support sales and subsequently production over the course of the coming 12 months.