Manufacturing sector growth moderates in April

New Delhi: India’s manufacturing sector growth slipped in April when compared with the previous month, but remained at the second-highest level in three-and-a-half years on the back of strong demand even though prices jumped, an industry survey conducted by S&P Global showed on Thursday.

Purchasing Managers’ Index (PMI) for manufacturing declined to 58.8 in April from 59.1 recorded in March. The PMI print above 50 indicates growth in the sector while below 50 shows contraction.

Despite falling from 59.1 in March to 58.8 in April, the seasonally adjusted HSBC India manufacturing PMI “signalled the second-best improvement in the health of the sector for three-and-a-half years,” S&P Global noted in the report.

Indian manufacturers reported robust demand for their goods in April, from both domestic and external clients. Total new orders rose sharply, with the pace of expansion being the second-strongest since the start of 2021. Growth was spurred by healthy demand trends and successful marketing campaigns.

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. External demands were driven by Asia, Australia, Europe and the Americas.

“April’s manufacturing PMI recorded the second fastest improvement in operating conditions in three-and-a-half years, bolstered by strong demand conditions which resulted in a further expansion of output, albeit slightly slower than in March,” said Pranjul Bhandari, Chief India Economist at HSBC.

The PMI data is based on a survey of around 400 manufacturers spread across the country.

As per the survey, firms experienced a sharp upturn in new business intakes, and scaled up production accordingly.

“With sales expected to remain positive, buying levels were raised and input stocks lifted to one of the greatest extents seen in over 19 years of data collection,” the report noted.

Amid reports of higher material and labour costs, Indian manufacturers increased their selling prices in April. The rate of charge inflation jumped to a three-month high.

“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,” said Bhandari.

Business confidence strengthened in April on the back of expectations that demand will remain buoyant in the year ahead. A positive outlook for the year ahead prompted firms to expand their staffing levels. Manufacturers hired additional staff at the start of the first fiscal quarter. The pace of job creation was moderate, nevertheless the quickest since September 2023.