India's manufacturing PMI declines to 58.8 in April

The country's Purchasing Manager's Index (PMI) for the manufacturing sector witnessed a marginal decline to 58.8 in April, according to the latest HSBC India Manufacturing PMI survey conducted by S&P Global. In March, the manufacturing PMI stood at 58.8. A reading above 50 indicates an overall increase in the factory output. The rate of expansion was the third-strongest since early 2005.

"Expectations that demand conditions will remain conducive to growth-supported inventory-building initiatives," says S&P Global.

According to the survey, the domestic manufacturing sector started the first fiscal quarter in high gear, and the operating conditions improved at the second-fastest pace in three-and-half years, supported by buoyant demand.

Notably, the rise in raw material stocks during the month was supported by increased buying levels. Inputs were purchased to the greatest degree since June 2023. Besides this, suppliers’ ability to deliver items promptly also aided in an increase in raw material stocks.

"April’s manufacturing PMI recorded the second fastest improvement in operating conditions in three-an-a-half years, bolstered by strong demand conditions which resulted in a further expansion of output, albeit slightly slower than in March. Improvements in suppliers’ delivery times contributed to increased purchasing activity. Additionally, a positive outlook for the year ahead prompted firms to expand their staffing levels. On the price front, higher costs of raw materials and labour led to a modest uptick in input costs, but inflation remains below the historical average. However, firms passed these increases onto consumers through higher output charges, as demand remained resilient, resulting in improved margins," says Pranjul Bhandari, chief India economist, HSBC.

Meanwhile, domestic manufacturers reported robust demand for their goods in April, as petr the survey. Total new orders witnessed a sharp surge, with the pace of expansion being the second-strongest since 2021. “Growth was spurred by healthy demand trends and successful marketing campaigns. Other sources of sales gains cited by firms were Asia, Australia, Europe and the Americas. 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,” says S&P Global.

 Notably, sustained improvements in demand, favourable economic conditions and greater sales volumes continued to underpin output growth. Despite easing since March, the pace of expansion was the second-strongest in three-and-a-half years, according to the survey.

In terms of employment, hiring of additional staff continued in the March quarter of 2024. "The pace of job creation was moderate, but nevertheless the quickest since September 2023. Meanwhile, pressure on operating capacities remained mild as evidenced by a slight uptick in outstanding business volumes," says S&P Global.