India, ASEAN Manufacturing Slowdown Drags Global Economic Momentum Amid Ongoing West Asia Crisis

Global Manufacturing Activity Slows Down in March

The JP Morgan Global Manufacturing PMI eased to 51.3 in March, down from 51.8 in February, as India and ASEAN economies dragged down global manufacturing activity. This slowdown was most pronounced across Asia, particularly in Indonesia, Vietnam, India, and the Philippines, where output index readings deteriorated sharply compared to February.

India's manufacturing PMI fell to 53.9 in March from 56.9 in February, its lowest level since June 2022, amid softer demand and rising input costs across commodities such as aluminium, chemicals, and fuels. India ranked third in global manufacturing PMI standings in March, behind Greece and Thailand, after leading growth in February.

Asia Bears the Brunt of Slowdown

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Across ASEAN, the manufacturing PMI declined to 51.8 from 53.8, marking a six-month low as price pressures intensified and growth softened in four of seven tracked economies. China's PMI also moderated to 50.8 from 52.1, although it remained in expansion territory for the fourth consecutive month. The pace of growth slowed alongside a sharp rise in input cost inflation – the highest since March 2022.

South Korea stood out with stronger expansion, as its PMI rose to 52.6 from 51.1, supported by improved domestic demand and new product launches.

Developed Markets Show Relative Resilience

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In contrast, manufacturing activity in developed economies remained comparatively resilient. The US PMI rose to 52.3 in March from 51.6, indicating faster output growth despite a sharp rise in input and output price inflation. Employment levels remained broadly unchanged. The Eurozone PMI improved to 51.6 from 50.8, though firms reported sharply higher input costs and accelerated job cuts. Business confidence slipped to a five-month low.

The UK PMI declined to 51 from 51.7, with manufacturing output contracting for the first time in six months. Input cost inflation surged to one of the highest levels on record, triggering job losses and weakening business optimism.

Inflation Pressures Intensify Globally

A key theme across geographies was the sharp acceleration in input cost inflation. Globally, input prices rose at the fastest pace since July 2022, with similar trends observed in the US, Eurozone, UK, China, and ASEAN economies. This led to higher output prices across most economies, although in India, firms absorbed part of the cost increase, resulting in output price inflation easing to a two-year low.

Labour market trends were mixed. While countries such as India, China, and South Korea reported employment growth, job cuts were recorded in the Eurozone, UK, and Australia. Business confidence weakened globally, with the future output index slipping to a five-month low. ASEAN optimism fell to a four-month low, while Australia recorded its weakest sentiment in 20 months. However, India recorded a stronger business confidence compared with February.

Employment and Sentiment Weaken; South Asia Goes the Other Way

However, a prolonged conflict could spell trouble. US President Donald Trump on Thursday indicated an intensification of hostilities, which sent crude prices soaring to $108 per barrel.