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Written by Anant Chandak
BENGALURU (Reuters) – Business activity in India ended the current fiscal year on a strong note, expanding at the fastest pace in eight months in March, leaving the country the fastest growing among major economies, a business survey showed. It was suggested that it would grow.
HSBC’s India Purchasing Managers’ Index (PMI), compiled by S&P Global, stood at 61.3 this month, up from February’s final reading of 60.6.
This extended the continuous expansion of activity to 32 months. The 50 mark is the difference between expansion and contraction on a monthly basis.
“The headline index of production rose sharply, led by the strongest manufacturing output in nearly three-and-a-half years,” said Pranjul Bhandari, chief India economist at HSBC.
“New orders increased at a faster pace than the previous month, with both domestic and export orders showing improved vitality.”
Growth was driven by manufacturing, which has been one of the economy’s main drivers over the past few quarters. The index tracking factory activity rose to 59.2 from 56.9 the previous month, the highest level since February 2008.
Demand for manufactured goods in Asia’s third-largest economy remains strong, with new orders registering the fastest growth in more than three years.
On the other hand, service activity also remained strong, but the index in March was 60.3, slightly down from 60.6 in the previous month.
Overall exports expanded at the fastest pace in seven months.
Businesses’ optimism for next year increased this month, with expectations that strong demand and economic conditions will continue to support growth. Companies also ramped up hiring at the fastest pace since September.
However, overall price pressure increased this month. Input costs for service companies rose at the fastest pace in seven months, with billed prices rising by the most since July 2017.
Manufacturer prices rose at the slowest pace in more than a year in March, but input costs rose faster this month than in February.
This suggests that overall inflation is likely to remain high and the Reserve Bank of India may have less incentive to cut interest rates in the near term.
(Reporting by Anant Chandak; Editing by Kim Coghill)
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