India's manufacturing activity showed a mild recovery in April, with growth in new orders and output improving sequentially, though the pace remained among the slowest in nearly four years, according to a PTI report.
PMI Details
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 54.7 in April from 53.9 in March. While this signals continued expansion, it also marks the second-slowest improvement in overall operating conditions in close to four years. In PMI terms, a reading above 50 indicates expansion, while below 50 denotes contraction.
Pranjul Bhandari, Chief India Economist at HSBC, commented: "India's manufacturing PMI rose to 54.7 in April, up from 53.9 in March, but still marking the second-slowest improvement in operating conditions in nearly four years."
Key Indicators
The survey revealed that growth in new orders and output strengthened compared with March, though both indicators remained weaker than levels seen over the past three-and-a-half years. Participants cited advertising efforts and resilient demand as factors supporting sales and production. However, competitive pressures, the Middle East conflict, and delays in client approvals constrained growth.
Bhandari noted: "Spillovers from the Middle East conflict are becoming more evident, particularly through inflation: input costs increased at the fastest pace since August 2022, and output prices rose at the quickest rate in six months." He added that "output, new orders (including exports) and employment all grew moderately, pointing to continued resilience in India's manufacturing sector."
Export Orders and Costs
New export orders rose sharply at the start of the fiscal year, recording a seven-month high. Firms reported stronger demand from markets including Australia, France, Japan, Kenya, mainland China, Saudi Arabia, the UAE, and the UK.
On the cost front, companies reported rising prices for aluminium, chemicals, electrical components, fuel, leather, petroleum products, and rubber. Many attributed the increases to the Middle East war. Input costs rose at the fastest pace in 44 months, while output prices increased at the quickest rate in six months. Overall inflation reached its highest level since August 2022, prompting manufacturers to raise selling prices accordingly.
Employment and Outlook
Despite only a marginal rise in outstanding business volumes, firms increased hiring, with job creation marking its strongest pace in ten months. While manufacturers remained optimistic about future growth, overall confidence softened from March levels, with expectations hinging on stronger marketing outcomes and approvals for pending projects.
The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from around 400 manufacturing firms.
