India's Manufacturing Sector Remains Strong Despite Slight Slowdown In April

India's manufacturing sector experienced a slight slowdown in growth during April, yet remained strong, driven by high demand, according to data from a private business survey released on Thursday (2 May).

The HSBC final India Manufacturing Purchasing Managers' Index (PMI) indicated a drop to 58.8 in April from a 16-year peak of 59.1 in March.

Despite this minor decline, the PMI continues to stand well above the neutral threshold of 50.0 and the long-term average of 53.9, signalling ongoing expansion in the sector.

Pranjul Bhandari, Chief India Economist at HSBC, noted, "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".

The survey highlighted a significant increase in new orders for Indian manufacturers, with the pace of expansion being the second-strongest since the beginning of 2021.

This growth has been supported by robust demand trends and effective marketing campaigns.

Additionally, the survey reported that to accommodate the rising and anticipated demand, companies have increased their procurement of raw materials to nearly record levels.

In terms of costs, the report indicated a modest rise in input costs due to higher raw material and labour prices.

However, inflation rates remain below the historical average.

Firms responded to these cost increases by raising output charges, thus maintaining resilient demand and improving profit margins.

The report also pointed to a notable rise in new export orders in April, though these grew at a slower pace compared to total sales, underscoring the domestic market as the primary growth driver.

To manage the increased workload, manufacturing firms began hiring more personnel at the start of the first fiscal quarter, with the rate of employment growth described as moderate.

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