Manufacturing grows at faster pace than services in March: Report

India’s private sector showed a mixed performance in March, flash PMI (Purchasing Managers’ Index) data showed on Monday. While manufacturing expanded at a faster pace in the month, services slowed down. A statement by S&P global said that the HSBC Flash India Manufacturing PMI rose to 57.6 in March as against a final index of 57.3 in February. It signals “a notable improvement in operating conditions that was broadly aligned with the average for the 2024/25 fiscal year,” the statement said, while adding that three of its five main sub-components have risen since last month, namely output, new orders and stocks of purchases. “India’s manufacturing sector expanded at a faster pace in March, according to the flash PMI. The output index has risen to its highest level since July 2024. Yet, the margin squeeze on manufacturers has intensified as input price inflation ticked up, while factory gate prices rose at the weakest rate in a year. The moderation in new export orders growth was also noteworthy amid tariff announcements,” said Pranjul Bhandari, Chief India Economist at HSBC.

In the month under review, HSBC Flash India Services PMI Business Activity Index dropped to 57.7 as against 59 of February. This impacted the Composite Output Index, which dropped to 58.6 in March as against a final figure of 58.8 in February.

The statement said that order book volumes at Indian private sector companies continued to be supported by international sales. New export order growth eased to a three-month low, but have remained marked and above the average since the series started in September 2014. Manufacturing companies registered a faster upturn in new business from abroad than their services counterparts. “As has been the case for nearly three-and-a-half years, outstanding business volumes across India’s private sector increased during March. The rate of accumulation slowed from February, however, and was mild overall,” it said, while adding that there were softer increases in both the manufacturing and service categories.

The statement also highlighted that though job creation had slowed down a bit, it was still solid. “Efforts to stay on top of workloads and fulfil rising demand needs prompted private sector companies to hire extra staff in March. Despite slowing to a six-month low, the aggregate pace of job creation was solid by historical standards,” it said. Further, for the first time in seven months, manufacturers signalled a faster increase in headcounts than service providers.

Overall, confidence was positive, but sentiments had weakened. “Business confidence remained strongly positive, but the overall level of sentiment slipped to a seven-month low in March. Fierce competition featured as the main worry among survey participants in the qualitative part of the survey.

Both manufacturers and service providers were slightly less upbeat towards output prospects than in February,” the statement concluded.