India’s manufacturing sector expands at fastest pace since June 2024 on strong export demand

India’s manufacturing sector expanded at its fastest pace in 10 months during April, driven by robust export demand and increased production, even as companies raised selling prices at the sharpest rate in over a decade, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI) released on Friday.

The PMI, compiled by S&P Global, edged up to 58.2 in April from 58.1 in March, slightly below the preliminary estimate of 58.4 but firmly in expansion territory.

A reading above 50 indicates growth, while a figure below signals contraction.

Export Boom Signals Shift in Global Trade Dynamics

The survey highlighted a significant uptick in new export orders, which grew at the second-fastest pace in more than 14 years, just behind January’s record surge.

As per the survey, firms reported increased demand from clients across Asia, Europe, and North America.

“The notable 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 U.S. tariff announcements," said Pranjul Bhandari, chief India economist at HSBC.

Output and Hiring Surge, But Prices Climb

Manufacturing output expanded at its sharpest rate since June 2024, with consumer goods leading the charge. New orders remained strong, hovering near March’s eight-month high, while hiring activity also picked up, with both permanent and temporary roles seeing increased recruitment.

However, manufacturers also hiked selling prices at the steepest pace since October 2013, passing on rising costs to consumers. This aggressive pricing strategy came despite only a moderate increase in input costs, suggesting firms are capitalizing on strong demand to boost margins.

“Input prices increased slightly faster, but the impact on margins could be more than offset by the much-faster rise in output prices,” Bhandari noted.

Optimism at Historic Highs

Business confidence remained elevated, with over 30% of surveyed manufacturers expecting higher production in the coming year. The sustained optimism reflects India’s growing role in global supply chains, particularly as firms diversify away from traditional manufacturing hubs like China.

With export demand showing no signs of slowing and domestic consumption holding steady, the survey noted that India’s manufacturing sector appears poised for sustained growth.

However, persistent inflationary pressures could test the resilience of both businesses and consumers in the months ahead.