BENGALURU, April 3 (Reuters) - India's manufacturing
sector expanded at its quickest pace in three months in March on
improved output and new orders, although firms shed jobs for the
first time in over a year, a private business survey showed on
Monday.
Overall, the survey supports views that Asia's third-largest
economy is better placed than many to weather the impact of a
potential global downturn. The Indian economy was forecast to
grow 6.9% this fiscal year and 6.0% next.
The Manufacturing Purchasing Managers' Index compiled by S&P
Global increased to 56.4 in March from February's 55.3,
remaining above the 50-mark threshold that separates growth from
contraction for a 21st straight month. It was higher than a
Reuters poll forecast of 55.0.
"Underlying demand for Indian goods remained strong in
March...Hence, production continued to expand at a robust clip
and firms stepped up their stock-building efforts," Pollyanna De
Lima, economics associate director at S&P Global Market
Intelligence, said in a release.
The new orders sub-index, which tracks overall demand, rose
last month and foreign demand expanded at a quicker rate from
February. Output grew at the strongest pace since December.
However, that improvement did not translate to increased
hiring as job market conditions darkened, slipping back into
contraction for the first time in 13 months although the pace of
job shedding was minimal.
Optimism about future output slipped to an eight-month low
due to concerns surrounding competitiveness and general
inflation.
While input cost inflation retreated to its second-lowest
mark in 2-1/2 years, firms did pass on some of the pressures of
greater labour and raw material costs to customers. The output
prices sub index rose to 52.0 from 51.8.
That would likely keep retail inflation elevated over the
coming months. Inflation was expected to average 6.7% this
fiscal year and then slow to 5.2% in the next, remaining above
the Reserve Bank of India's 4.0% medium-term target, a Reuters
poll showed.
High inflation could deter the central bank from pausing
interest rate hikes after a final lift this month as was
predicted in a Reuters poll.
"Although manufacturers were upbeat towards future new
orders, they somewhat doubted that inflation would continue to
recede. Such worries restricted optimism towards output
prospects," De Lima said.
(Reporting by Anant Chandak
Editing by Shri Navaratnam)
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