India’s manufacturing sector activity slowed in April, but operating conditions still recorded the second-fastest improvement in three-and-a-half years, supported by rising demand. The seasonally adjusted ‘HSBC India Manufacturing Purchasing Managers’ Index’ (PMI) declined to 58.8 in April from 59.1 in March. Under PMI, an index above 50 means expansion in production activities, while a figure below 50 indicates a decline.
Reason for strength in manufacturing sector
HSBC Chief India Economist Pranjul Bhandari said strong demand conditions led to further growth in output, although the growth was slightly slower than in March. Indian manufacturers reported strong demand for their goods from domestic and external customers in April, the report said.
Increase in new contracts
Total new contracts increased sharply and the pace of expansion was the second strongest since the beginning of 2021. Additionally, new export contracts increased significantly in April. However, this growth remained slow compared to total sales, indicating that the domestic market remained the main driver of growth. Indian manufacturers increased their selling prices in April amid reports of rising material and labor costs.
increased costs
Bhandari said that on the price front, raw material costs have increased marginally due to higher costs of raw materials and labour, but inflation remains below the historical average. However, companies passed on the increase to consumers by increasing production duties as demand remained strong, resulting in improved profits, he said. The HSBC India Manufacturing PMI has been prepared by S&P Global based on responses to questionnaires sent to purchasing managers in a group of about 400 companies.
Latest Business News