India's Manufacturing Sector PMI Shoots Up To Second Best High In 3.5 Years

The growth in India's manufacturing sector moderated slightly in April but remained robust, witnessing the second-best improvement in operating conditions in three-and-a-half years. Despite falling from 59.1 in March to 58.8 in April, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index or PMI signalled a significant improvement in demand for the health of the sector, prompting firms to ramp up purchases of raw materials at a near-record pace, a private survey showed on Thursday.

In PMI parlance, a point above 50 means expansion while a score below 50 denotes contraction. “April’s manufacturing PMI recorded the second fastest improvement in operating conditions in three-an-a-half years, bolstered by strong demand conditions which resulted in a further expansion of output, albeit slightly slower than in March. Improvements in suppliers’ delivery times contributed to increased purchasing activity,” said Pranjul Bhandari, chief India economist at HSBC.

“Additionally, a positive outlook for the year ahead prompted firms to expand their staffing levels. On the price front, higher costs of raw materials and labour led to a modest uptick in input costs, but inflation remains below the historical average. However, firms passed these increases onto consumers through higher output charges, as demand remained resilient, resulting in improved margins,” Bhandari added.

As per the survey, Indian manufacturers reported a robust demand for their goods in April, from domestic and external clients. “Total new orders rose sharply, with the pace of expansion being the second strongest since the start of 2021. Moreover, new export orders increased markedly in April, albeit at a softer rate than that seen for total sales, suggesting that the domestic market remained the main driver of growth,” it said.