Indian manufacturing sector boomed

neerajsingh18

Apr 3

Indian manufacturing sector boomed

India's manufacturing sector flourished at its quickest pace in three months in March due to improved output and new orders. Although some of the reports are showing that firms cast jobs for the first time in over a year.

India which is Asia's third-largest economy has been placed much better position than many economies in the world to endure the impact of a potential global downturn. Even the Indian economy is already forecast to grow 6.9% this fiscal year and 6.0% next.

Reason behind sharp pace:

The Manufacturing Purchasing Managers' Index showed an increase to 56.4 in March from February's 55.3 which remaining above the 50-mark threshold that separates growth from contraction for a 21st straight month.

Production continued to expand at a robust clip and firms stepped up their stock-building efforts as underlying demand for Indian goods stayed strong in March.

The new orders sub-index, which tracks overall demand, rose last month and foreign demand expanded at a quicker rate from February. Output raised at the strongest pace since December.

However, that improvement did not convert into increased hiring as job market conditions darkened.

Optimism about future output slid to an eight-month low due to concerns surrounding competitiveness and general inflation.

Input cost inflation withdrew to its second-lowest mark in last two years. The output prices sub index grew to 52.0 from 51.8.

Estimation for future:

Inflation has been expected to average 6.7% this fiscal year and 5.2% in the next. Both of the estimations are remained above the Reserve Bank of India's 4.0% medium-term target.

It would likely keep retail inflation elevated over the coming months.

High inflation could stop the central bank from pausing interest rate hikes.