India’s manufacturing sector kicked off April on a robust note, marking the second-fastest pace of improvement in three-and-a-half years. Fueled by rising market demand, firms experienced a notable uptick in new business intakes and ramped up production levels, according to the latest HSBC PMI data.
Although April saw a slight dip compared to the previous month, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) remained above the neutral mark of 50.0, signaling the sector’s continued strength. Input stocks expanded significantly, reaching levels unprecedented in 19 years of data collection, driven by optimistic expectations of sustained demand growth.
Pranjul Bhandari, HSBC’s Chief India Economist, noted that April’s manufacturing PMI showcased the sector’s second-fastest improvement in operating conditions in three-and-a-half years. While output expanded further, albeit at a slightly slower pace than March, strong demand conditions remained the primary driver.
In response to rising demand, manufacturers bolstered their workforce, marking the quickest pace of job creation since September 2023. However, operating capacities faced only mild pressure, with a slight increase in outstanding business volumes.
Although new export orders saw an uptick, domestic demand remained the primary growth driver, with both domestic and external clients contributing to the surge in demand for Indian goods.
Manufacturers are optimistic about future output levels, buoyed by robust business confidence and expectations of sustained demand growth. Advertising and brand recognition efforts are viewed as avenues to further enhance growth prospects.
Despite upward cost pressures, inflation rates remained below long-run averages. Items like aluminium, paper, plastics, and steel witnessed price hikes, prompting Indian manufacturers to raise selling prices, leading to a three-month high in charge inflation.
In summary, the data paints a positive outlook for India’s manufacturing sector, driven by robust demand dynamics, strong output growth, and optimistic business sentiment.
