India’s manufacturing PMI falls to 58.8 in April from March’s 16-year high

India’s manufacturing activity witnessed a dip in April from the 16-year high in March. India’s manufacturing PMI fell to 58.8 in April from 59.1 in March.  

The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, despite a fall, signalled the second-best improvement in the health of the sector for 3.5 years. The PMI was comfortably above the neutral mark of 50.0 and its long-run average of 53.9. 

Operating conditions improved at the second-fastest pace in three-and-a-half years, supported by buoyant demand, while firms experienced a sharp upturn in new business intakes. Sales are expected to remain positive, buying levels raised and input stocks lifted to one of the greatest extents seen in over 19 years of data collection, the report added. 

Pranjul Bhandari, Chief India Economist at HSBC, said, "April’s manufacturing PMI recorded the second fastest improvement in operating conditions in three-and-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."

Stocks of purchases increased sharply, and the rate of expansion was third-strongest since data collection began in early 2005. Suppliers’ ability to deliver items in a timely manner facilitated this, the report added. Total new orders rose sharply, with the pace of expansion being the second strongest since the start of 2021.

Sales gains were cited by firms from Asia, Australia, Europe and the Americas. New export orders increased markedly and there were sustained improvements in demand. 

Indian goods producers forecast higher output in the year ahead, business confidence strengthened, manufacturers hired additional staff at the start of the first fiscal quarter, the pace of job creation was moderate, pressure on operating capacities remained mild, and the rate of inflation remained below its long-run average. 

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, stated the report.