HSBC's Purchasing Managers’ Index slowed to 54.7 per cent in March from 56.6 in February. Indian manufacturers reported a marked rise in new business received during March. However, the rate of expansion was the weakest in three months, said a press release from HSBC.

Power cuts and raw material shortages limited their ability to take on new business. In contrast, new export order growth gained pace in March. With the expansion in output restricted, backlogs of work accumulated at a much faster pace.

March data signalled a marginal rise of employment in the manufacturing sector. Job creation has now been registered in three of the last four months, the report said.

Commenting on the India Manufacturing PMI survey, Mr Leif Eskesen, Chief Economist for India & ASEAN at HSBC, said: “Activity in the manufacturing sector expanded at a slower pace in March led by a moderation in output and order growth, although export orders accelerated. Capacity remains tight, with backlogs of work increasing, and supplier delivery times lengthening. While inflation of output prices eased, a further rise in input price inflation suggests it could pick up again as cost pressures are passed on to customers. These numbers suggest that upside risk to inflation remain and that the RBI’s easing cycle, in terms of timing and magnitude, depends on the extent to which these risks materialise.’’

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