India’s factory activity slowed in March as rising prices meant new orders and production grew at the weakest rate since September, according to a survey released on Monday that showed optimism at a two-year low.
The survey provides the latest evidence that the recovery in Asia’s third-largest economy is slow. hiking in oil pricesPrimarily driven by the uncertainties surrounding the Russo-Ukraine war, has already taken a toll on consumer spending – its biggest contributor GDP growth,
Compiled by S&P Global, the Manufacturing Purchasing Managers’ Index declined to 54.0 in March, from 54.9 in February. However, it remained above the 50-level separating growth from contraction for nine consecutive months.
Despite that decline, the sector had its best annual fiscal year performance since fiscal year 2011/12.
“Manufacturing sector growth in India remained weak at the end of fiscal 2021/22, with companies reporting soft expansion in new orders and production,” said Polyana de Lima, economics associate director at S&P Global.
“The slowdown was accompanied by increased inflationary pressures, although the rate of increase in input costs remained below the rate seen at the end of 2021.”
The sub-index tracking new orders and output was at a six-month low and overseas demand contracted for the first time since June 2021, highlighting a weak global economic recovery and a slowdown in China.
But the factories increased the number of employees for the first time in four months.
Nevertheless, rising cost pressures remained one of the main concerns as firms faced a sharp rise in input prices last month, forcing them to shift some of the burden to consumers. Production prices rose at the fastest rate in five months.
De Lima said, “For now, demand has been strong enough to withstand price increases, but if inflation continues to pick up, we may see a further slowdown, if there is an outright contraction in sales.” Does not happen.” “The companies themselves appear to be very concerned about price. The pressure, which was a key factor driving business confidence to a two-year low.”
Like other major economies, India has been facing a steady rise in inflation due to supply disruptions and a jump in oil prices – the largest component of the country’s imports.
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