Manufacturing PMI Eases In April, But Still Indicates Strong Expansion
Expectations that demand conditions will remain conducive to growth supported inventory-building initiatives.
An indicator of manufacturing activity signalled the second-best improvement in the health of the sector for three-and-a-half years. The HSBC India Manufacturing PMI eased to 58.8 in April from 59.1 in March. A print above 50 indicates expansion.
Stocks of purchases, one of the five sub-components of the headline figure, increased sharply in April, according to a press release on Thursday. The rate of expansion was the third strongest since data collection started in early 2005, behind only those recorded last month and May 2023.
Expectations that demand conditions will remain conducive to growth supported inventory-building initiatives. Indian manufacturers reported robust demand for their goods in April, from domestic and external clients. Total new orders rose sharply, with the pace of expansion being the second strongest since the start of 2021. Growth was spurred by healthy demand trends and successful marketing campaigns, the release said.
New export orders increased markedly in April, albeit at a softer rate than that seen for total sales, suggesting that the domestic market remained the main driver of growth. Sustained improvements in demand, favourable economic conditions and greater sales volumes continued to underpin output growth.
Indian goods producers forecast higher output in the year ahead, relative to present levels. Business confidence strengthened in April on the back of expectations that demand will remain buoyant. Advertising and brand recognition were also reported as opportunities to the outlook.
To fulfil current and expected improvements in demand, manufacturers hired additional staff at the start of the first fiscal quarter. The pace of job creation was moderate, but nevertheless the quickest since September 2023.
Pressure on operating capacities remained mild as evidenced by a slight uptick in outstanding business volumes. Although the latest results showed an intensification of cost pressures during April, the rate of inflation remained below its long-run average. Among the items mentioned as up in price were aluminium, paper, plastics and steel. Amid reports of higher material and labour costs, Indian manufacturers increased their selling prices in April. The rate of charge inflation quickened to a three-month high, converging to its long-run average.
