April composite PMI at 60 as biz growth hits 8-month high on export surge

Manufacturing PMI rose to a 1-year high of 58.4 in April; services hit 4-month peak at 59.1, signalling robust private sector growth and strong demand across both segments

India's private sector growth rose to an eight-month high in April fueled by robust demand, particularly a surge in foreign orders for manufactured goods, according to a survey, but business confidence showed some signs of softening. 

While the latest data underscores a vibrant start to the fiscal year for India's economy, the souring outlook will make it challenging to maintain momentum at a time when US President Donald Trump's tariffs have hurt business sentiment. 

The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 60.0, up from 59.5 in March, the strongest pace of combined manufacturing and services growth since August. 

 

The 50-mark separates growth from contraction.

 

Manufacturing growth underpinned the strong performance, with the index rising to 58.4 from 58.1 and reaching a level not seen in a year. The services PMI index also showed solid growth, rising to a four-month high of 59.1 from 58.5 last month. 

Higher new business in the services sector and an improvement in goods production and new orders - a key gauge for demand - especially from international clients, were the primary drivers of the overall positive momentum. 

"New export orders accelerated sharply, likely buoyed by the 90-day pause in the implementation of tariffs," said Pranjul Bhandari, chief India economist at HSBC referring to Trump's decision to target dozens of countries on April 2 by announcing sweeping tariffs on goods before deferring them for 90 days. 

India is trying to position itself as a manufacturing base of choice for the world as China faces high US duties. 

The record surge in new export business, the strongest since the index was measured in September 2014, was heavily concentrated within the manufacturing sector which registered the most significant increase in over 15 years. 

"As a result, output and employment grew, for both, manufacturers and service providers," Bhandari added. 

Amid an intensification of capacity pressures, firms continued to hire additional staff across sectors with goods producers recording the highest employment generation since the beginning of the survey in March 2005. 

While input cost inflation trends were mixed, accelerating in the manufacturing sector and decelerating in their services counterpart compared to March, robust demand allowed firms to pass higher costs on to clients. 

Selling prices saw a sharper increase led by manufacturers. 

Business sentiment was also mixed with strong order inflows improving optimism among goods producers, but softening in the services sector resulting in an eight-month low overall outlook for the coming year.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)