India's business activity ended FY25 on a positive note, as the manufacturing industry recorded a big increase in production and sales during March, led by increased demand for products. Employment also experienced an increase in the month, as revealed in the HSBC Flash India survey on Monday.
The HSBC Flash India Composite Output Index was unchanged at 58.6 in March, marginally below February's final reading of 58.8. The figure for March was still comfortably higher than the long-run average of 54.7, though, indicating still strong growth.
The HSBC Flash India Manufacturing PMI increased to 57.6 in March from 56.3 in February, indicating a significant improvement in operating conditions, which was well in line with FY25's performance. The survey revealed that three of the five main components of the index—output, new orders, and purchases stocks—registered an increase over the previous month.
Private sector businesses attributed the increase in production mainly to favorable demand patterns. New orders again grew, prolonging the ongoing phase of expansion to over three and a half years.
Production at goods producers rose more rapidly than in February, ahead of the expansion rate of service providers. Growth in the service sector eased slightly, the second-slowest since November 2023, as companies experienced increased competitive pressures.
Order volumes at India's private sector were firm, supported by export sales. New export orders accelerated at a slower rate than the last month but continued above the average rate of growth since the series started in September 2014. Manufacturing firms recorded a faster growth in new export business than service providers.
The outstanding business in India's private sector increased in March, although the growth rate remained lower than in February. Manufacturing and services both experienced moderate growth in unfulfilled orders.
Private sector firms increased recruitment in March to maintain pace with growing demand and control workloads. Manufacturers recorded a quicker rate of headcount increase for the first time in seven months compared to service providers.
Inflation continued to lag below its historic norm, as the pace of price rises on Indian goods and services hit its weakest since February 2022.
Even with the intense rivalry being the chief concern, corporate mood was strongly optimistic in March. Nevertheless, manufacturers and providers of services each felt slightly less positive about the prospects for output over the coming period than in February, said the HSBC survey.
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