India Manufacturing Sustains Robust Operating Conditions
India’s manufacturing activity moderated in April. However, operating conditions remained robust. They showed the second-best improvement in three-and-a-half years. This is according to the HSBC India Manufacturing PMI. The PMI fell to 58.8 from March’s 16-year high of 59.1. It indicates continued growth despite the slight moderation. Manufacturing activity levels are still expanding in India.
New Orders and Output Growth Soar
A sharp rise in new orders, growing at the second-strongest pace in almost 40 months, supported the growth in operating conditions. Domestic demand rose faster than export orders, leading to the second-highest output growth in 42 months.
Hiring and Input Purchases Increase
Operating conditions are favorable. Demand is expected to rise. Indian manufacturers reported higher confidence levels. They expect higher output in one year. Firms hired more employees at a moderate pace. It was the quickest since September 2023. Input purchases increased to the highest since June 2023. This signals optimism for India’s manufacturing landscape.
Input Costs and Selling Prices Rise
Even though input costs increased, producers expanded their stock inventories to the third-strongest level since early 2005. Expectations of conducive demand conditions supported inventory-building initiatives. Price increases were reported for materials like aluminium, paper, plastics, and steel, leading to higher selling prices at the fastest pace in three months.
Inflation Remains Below Historical Average
According to Pranjul Bhandari, chief India economist at HSBC, “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.” Firms passed these increases onto consumers through higher output charges, resulting in improved margins.
In conclusion, India’s manufacturing sector activity moderated in April, but still witnessed the second-best improvement in operating conditions in three-and-a-half years. The growth in new orders, output, and hiring, along with increased input purchases, indicates a continued growth trajectory for the sector.