Amid Middle East war, unstable market conditions and inflationary pressures, Indian private sector activity expanded in March with weakest pace since October 2022, with output growth easing across both manufacturing and services as the energy shock unfolds. According to the data report, the HSBC Flash India Manufacturing PMI declined from 56.9 in February to a four-and-a-half-year low of 53.8 in March, while HSBC Flash India Services PMI Business Activity Index fell to 57.2 in March from February’s final reading of 58.1. 

Besides, the HSBC Flash India PMI Composite Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - fell from a final reading of 58.9 in February to 56.5 in March, highlighting the weakest pace of growth in close to three-and-a-half years. The report said that though there was a softer upturn in domestic demand for goods and services, international orders rose to the greatest extent in the series history.

Besides, India's private sector witnessed inflationary pressures, with input costs rising to the greatest extent in close to four years. Firms absorbed a large part of their additional cost burdens, as indicated by a rise in selling prices that trailed that of input costs by a considerable margin. Nonetheless, the rate of charge inflation was marked and the strongest in seven months.

Further, outstanding business volumes at the composite level rose for the fourth successive month in March, but the pace of accumulation was only marginal. Whereas backlogs or work expanded among service providers, goods producers recorded the first decline in 17 months. Meanwhile, Indian private sector firms were optimistic of an increase in output levels over the course of the coming 12 months, on the back of efficiency enhancements, marketing campaigns and new client enquiries.