Factory activities rose to a three-month high of 56.4 in March on new orders and output amid demand resilience, although firms shed jobs for the first time in over a year, said the S&P Global India Manufacturing Purchasing Managers’ Index (PMI).

Economists said this should provide some added source of comfort to the RBI to hike rates again this Thursday. But the survey also shows that price pressures are well past the peak, supporting our view that the tightening cycle won’t run any further than this week.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 56.4 in March from 55.3 in February, signalling the strongest improvement in operating conditions in 2023.

The March PMI data pointed to an improvement in overall operating conditions for the 21st straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.

“Underlying demand for Indian goods remained strong in March, underscored by the quickest upturn in factory orders for three months. Hence, production continued to expand at a robust clip and firms stepped up their stock-building efforts,” said Pollyanna de Lima, economics associate director at S&P Global Market Intelligence.

Thamashi De Silva, assistant economist, CapitalEconomics, said: “Manufacturing PMI reading edged up in March and points to a healthy growth in the sector.

“This should provide some added source of comfort to the RBI to hike rates again this Thursday. But the survey also shows that prices pressures are well past the peak, supporting our view that the tightening cycle won’t run any further than this week.”