India's April factory activity reaches 10-month high, exports surge

Demand for Indian goods boosts 'companies' pricing power' and prompts them to continue hiring: PMI

India’s manufacturing accelerated in April to grow at its fastest pace in 10 months, helped by exports and accompanied by a notable improvement in employment, a private survey said on Friday.

 

The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, improved to 58.2 in April from 58.1 in March. A figure above 50 denotes expansion in manufacturing activity while below that signifies contraction. The headline figure has been in the expansion zone for the 46th month running.

 

“Total sales were supported by the second-fastest upturn in international orders since March 2011. Robust demand for Indian goods boosted firms' pricing power, with selling charges hiked to the greatest degree since October 2013,” said the survey.

 

Nomura Asia in a note on Friday said that manufacturing PMIs tumbled across most of Asia in April, led by a decline in new orders and output amid global trade uncertainty. This is the first PMI reading since US President Donald Trump imposed 10 per cent baseline tariffs on all countries and an aggressive 145 per cent tariff on China. Already, six out of eight economies that have reported April data have PMIs in contractionary territory.

 

"The PMIs of domestic-oriented economies like India and the Philippines, however, are holding up, with the latter experiencing a boost in activity due to upcoming elections. This suggests domestic demand will be pivotal in serving as a growth cushion against external shocks, which means policy stimulus, particularly on the fiscal side, is likely to gain traction," the note added.

 

Consumer goods companies reported the fastest increase among various sectors. A sharp rise in new business was a key factor for the latest improvement in output growth. 

 

“Little changed from March, the rate of expansion was the second-strongest for nine months. Respondents attributed growth to better domestic and international demand. With the sole exception of January, new business from abroad grew to the greatest degree in over 14 years at the start of the 2025-26 fiscal year (sic),” the survey noted. 

 

Pranjul Bhandari, chief India economist at HSBC, said the increase in new export orders in April may indicate a potential shift in production to India as businesses adapt to the evolving trade landscape and tariff announcements by the US.

 

“Manufacturing output growth strengthened to a 10-month high on robust orders. Input prices increased slightly faster, but the impact on margins could be more than offset by the much-faster rise in output prices, of which the index jumped to the highest level since October 2013," she said.

 

Besides, the PMI survey also said that manufacturers’ order book volumes occurred despite a marked increase in prices charged for Indian goods. The overall rate of inflation was the highest seen in 11-and-half years. Anecdotal evidence indicated that companies continued to transfer cost increases to clients.

 

“Input prices rose at the fastest pace in four months during April, with firms mentioning higher building maintenance, labour, leather, paper, rubber, steel, and transportation costs. That said, the rate of inflation was moderate and below that seen for selling charges,” said the survey.

 

Manufacturers continued to hire employees in April to meet growing output requirements. As many as 9 per cent of survey participants took in extra workers, who were offered a combination of permanent and temporary contracts.

 

Jan 2024	56.5
February	56.9
March	59.1
April	58.8
May	57.5
June	58.3
July	58.1
August	57.5
September	56.5
October	57.5
November	56.5
December	56.4
January 2025	57.7
February	56.3
March	58.1
April	58.2
Source: HSBC