India's manufacturing PMI hits 4-month high in April

According to a monthly survey report released on Monday, manufacturing activities in India accelerated further and touched a four-month high in April, boosted by robust new business growth, mild price pressures, better international sales, and improving supply-chain conditions.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) increased from 56.4 in March to 57.2 in April, indicating the fastest improvement in the health of the sector so far this year.

The March PMI data pointed to an improvement in overall operating conditions for the 22nd straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.

"Reflecting a robust and quicker expansion in new orders, production growth took another step forward in April. Companies also benefitted from relatively mild price pressures, better international sales, and improving supply-chain conditions," Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.

Factory orders and production rose at the strongest rates in 2023 so far, more jobs were created and companies stepped up input purchasing, owing to stock-replenishment efforts.

"It seems like Indian manufacturers have abundant opportunities to keep powering ahead. Besides seeing the strongest inflow of new work in 2023 so far, capacities were expanded through job creation, input buying was lifted, and pre-production inventories rose at a record rate," Lima said.

New orders placed with goods producers rose at the quickest pace since last December. According to panel members, the upturn was supported by favourable market conditions, demand strength, and publicity.

On the prices front, although manufacturers signalled higher operating costs in April—linked to fuel, metals, transportation, and some other raw materials—the overall rate of inflation remained below its long-run average despite quickening since March.

Charge inflation also quickened in April, reaching a three-month high and matching its long-run average. That said, while 6% of companies hiked their fees since March, 92% left them unchanged, the survey said.

Looking ahead, Indian manufacturers were confident that production volumes would be higher in 12 months' time, amid demand resilience, client enquiries, orders pending approval, and marketing efforts.

Moreover, the overall level of positive sentiment rose since March.

"Manufacturers are certainly upbeat towards growth prospects, with optimism improving from March's eight-month low on the back of contracts pending approval, rising client enquiries, marketing initiatives, and evidence of demand resilience," Lima said.

The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. Data collection began in December 2005.