In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. The two largest sub-components of the PMI, new orders and output, rose since March but trailing readings were seen in at least three-and-a-half years
New Delhi: India’s private sector manufacturing activity growth rebounded in April on the back of sharper export growth, after plummeting to a four-year low in March due to West Asia war-linked disruption. However, it remained stuck as weak demand and soaring input costs driven by the Middle East crisis weighed on activity, a private survey showed on Monday.
As per the survey, the HSBC India manufacturing purchasing managers’ index rose from 53.9 in March to 54.7 in April, signalling the second-slowest improvement in overall operating conditions in close to four years. The index, however, is a gauge of overall conditions derived from measures of new orders, output, employment, supplier delivery times and stocks of purchases.
In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. The two largest sub-components of the PMI, new orders and output, rose since March but trailing readings were seen in at least three-and-a-half years. “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,” said Pranjul Bhandari, chief India economist at HSBC.
As per the survey, the advertising and demand resilience supported sales and production, but that growth was hampered by competitive conditions, the war in the Middle East and reluctance among clients to approve pending quotes. “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,” Bhandari said.
Meanwhile, the survey also said that new export orders expanded sharply at the start of the first fiscal quarter, with the pace of growth reaching a 7-month high. Firms noted better demand from clients in several countries, including Australia, France, Japan, Kenya, mainland China, Saudi Arabia, the UAE and the UK.
“On the price front, companies continued to indicate that the war in the Middle East exerted upward pressure on inflation. Input costs and output charges rose at the quickest rates in 44 and six months respectively,” the survey added.
Amid reports of higher prices for aluminium, chemicals, electrical components, fuel, leather, petroleum products and rubber, average cost burdens rose further in April. Even the survey panellists often attributed hikes to the Middle East war. “The overall rate of inflation climbed to its highest in August 2022. Subsequently, goods producers lifted their fees to the greatest extent in six months,” the survey noted.
In terms of employment, the survey said that despite only a marginal increase in outstanding business volumes, manufacturers recruited additional workers at the start of the first fiscal quarter. “Moreover, the rate of job creation was marked and the strongest in ten months,” it added.
