India: Private sector PMI decreases in March, but remains upbeat nonetheless
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit fell from 57.3 in February to 56.0 in March. Nevertheless, the PMI remained well above the 50-threshold indicating an increase in business activity from the previous month.
The services PMI inched down to 54.6 in March from 55.3 in February as output expanded at slightly softer pace. Moreover, new orders increased for the sixth month running, but at a slower clip than in the previous month, likely weighed on by deteriorating demand from abroad. On the price front, input prices rose solidly, but output prices were only marginally higher as competitive pressures refrained firms from raising prices.
On the manufacturing side, the PMI ticked down from 57.5 in February to 55.4 in March. The ongoing recovery in demand kept new orders and production expanding at a healthy albeit softer pace in March relative to February. Moreover, employment levels fell for the twelfth consecutive month in March as Covid-19 restrictions continued to hamper operating conditions. On the price front, input prices continued to rise likely tied to supply constraints and higher demand for raw materials.
Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:
“The escalation of the pandemic and the reinstatement of restrictions could cause a notable slowdown in growth during April. Service providers hope for an improvement in vaccine availability, which would curb the spread of the disease and support the economy. Optimism towards the year-ahead outlook for business activity was sustained, but the overall level of confidence was unchanged from February and remained below its long-run average.”