Manufacturing lifts India's private sector activity in April: Report

India's private sector activity recovered in April with PMI rising to 58.3, driven by manufacturing output and sales, though input costs remained elevated amid fuel and raw material pressures

India’s private sector activity recovered in April on the back of growing output and sales primarily in manufacturing, after receding to a three-year low in March due to the West Asia conflict, a private survey said on Thursday.

 

HSBC’s flash India Composite Purchasing Managers’ Output Index (PMI), compiled by S&P Global, rose to 58.3, up from a final reading of 57 in March. The index was above 50, a mark that separates growth from contraction, for 57 months straight.

 

Flash PMI is an early indication of the final Manufacturing, Services, and Composite PMI data for the month, usually released a week before the final PMI indices. Flash PMI is typically based on around 90 per cent of total PMI survey responses received each month, and all responses are used in the final release.

 

 

“Manufacturing led the resurgence with notable rebounds in rates of increase for output and sales, but price pressures intensified here,” said S&P in a statement. Companies surveyed said capacity expansion, demand, more new work and technology investment supported business activity.

 

“Private sector activity accelerated after easing in March amid disruptions linked to the Middle East conflict. Manufacturing led the upturn, with faster growth in output and new orders. The survey indicated that firms are building buffer stocks to manage the uncertainties around the longevity of the supply-side shock,” said Pranjul Bhandari, chief India economist at HSBC.

 

The HSBC Flash India Manufacturing PMI rose to 55.9 in April from a final reading of 53.9 in March, which was nearly a four-year low. The Flash India Services PMI Business Activity Index picked up marginally to 57.9 from a final reading of 57.5 in March.

 

Manufacturing firms recorded faster increases in new orders and output than service providers.

 

Even for exports, the service sector saw a slowdown and grew at the slowest pace in over a year, while manufacturers had a quicker increase, growing at the fastest pace in nine months. At the composite level, growth in new export business was slower in April, compared to March, according to S&P.

 

The composite indices are calculated by weighting comparable manufacturing and services indices using official annual value-added data.

 

Costs remained high in April, with survey participants attributing the pressure to rising fuel, gas, oil and raw material prices.

 

“They (respondents) particularly signaled greater outlays on chemicals, food, jute, leather, metals, rubber and transportation. There were also mentions of gas shortages pushing up its price,” said the statement.

 

The overall rate of input cost inflation was the second-steepest in close to three years, despite slowing from March.

 

As costs rose, Indian companies lifted selling prices again at the start of the first quarter of FY27. However, the rate of output charge inflation was well below that seen for input costs, it added.

 

S&P said that for both input costs and final prices, the rate of inflation accelerated in the manufacturing sector and slowed in the services economy.

 

“Finished goods and input inventories increased alongside a pick-up in purchasing volumes. Input cost pressures remained elevated, and firms passed through part of the increase via higher selling prices,” Bhandari added.

 

The rate of job creation across India’s private sector reached a ten-month high in April, though growing at a higher pace for manufacturers than service providers.

 

“Qualitative evidence from the survey showed that growth (in employment) was fuelled by rising business requirements, expansion plans and upbeat year-ahead forecasts,” said the survey.