India's manufacturing PMI hits 4-month high in April on new orders, favourable market conditions

A monthly survey released on Monday, May 1, showed that India's manufacturing operations advanced further and touched a four-month high in April, backed by robust new business development, mild price pressures, higher overseas sales, and strengthening supply-chain conditions.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) rose from 56.4 in March to 57.2 in April, suggesting the sector's health has improved the fastest this year.

For the 22nd consecutive month, the March PMI statistics indicated an improvement in overall operational conditions. A number above 50 implies expansion, whereas 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 output increased at the fastest rates in 2023, more employment was created, and enterprises increased input purchasing due 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.

In terms of price, while manufacturers reported increased operating expenses in April, owing to increases in gasoline, metals, transportation, and some other raw materials, the overall rate of inflation remained below its long-run average, albeit accelerating since March.

In April, charge inflation also accelerated, reaching a three-month high and matching its long-run average. However, while 6 per cent of companies increased their fees since March, 92 per cent kept them the same, according to the survey.

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.

S&P Global compiles the S&P Global India Services PMI from questionnaire responses from a panel of around 400 service sector companies. Based on GDP contributions, the panel is stratified by detailed sector and corporate employee size. The gathering of data began in December 2005.

(with PTI Inputs)

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