Producers, buoyed by current and projected demand growth, reported higher levels of confidence, expecting higher production in the coming year. File (representative image) | Photo source: Reuters
India’s manufacturing sector activity fell slightly in April but still saw its second-biggest improvement in operating conditions in three-and-a-half years, according to the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI), which fell to 58.8 from a 16-year high of 59.1 recorded in March.
An index reading above 50 indicates an escalate in activity level. There was a surge in novel orders, growing at the second fastest rate in almost 40 months, with domestic demand growing faster than export orders. Output growth moderated from March but was still the second highest in 42 months.
Producers, buoyed by current and projected demand growth, reported higher levels of confidence, expecting higher production in the coming year. Companies hired more workers at a moderate but fastest pace since September 2023. However, pressure on operational capacity remained low.
Even as input costs rose, manufacturers increased input purchases to the highest level since June last year, and their inventory growth was the third largest since early 2005, when PMI data collection began. Expectations that demand conditions will continue to support growth-supported inventory-building initiatives, according to the index announcement.
Price increases were recorded for materials such as aluminum, paper, plastics and steel, and manufacturers raised selling prices in April at the fastest pace in three months, noting that labor costs also rose.
“On prices, higher raw material and labor costs have led to moderate increases in production costs, but inflation remains below historical averages. However, companies passed these increases on to consumers in the form of higher production fees as demand remained stable, resulting in improved margins,” said Pranjul Bhandari, chief economist at HSBC India.
The April Indian manufacturing PMI reading is softer than the Flash PMI released on April 23, which was based on 75-85% of responses from companies to the survey-based index. The preliminary reading shows that the manufacturing PMI was 59.1 in April, recording no change from March.
