“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,” said Pranjul Bhandari, chief economist, HSBC.
Strong demand conditions, however, ensured improved optimism as businesses raised their year-ahead outlook.
The India Manufacturing Purchasing Managers’ Index remained high above the 50-level, which separates expansion from contraction, and even above the long-run average of 53.9.
New orders also expanded at the second fastest levels since 2021, with Asia, Australia, Europe and Americas contributing to new orders.
India’s merchandise exports declined 3% to $437 billion in FY24. But the government expects India’s merchandise export performance to improve this fiscal, as the global economy and trade shows signs of recovery.
The 400 manufacturing firms surveyed in April also exhibited more optimism for the year ahead.
“Business confidence strengthened in April on the back of expectations that demand will remain buoyant. Advertising and brand recognition were also reported as opportunities to the outlook,” the report noted.
Firms also pointed to higher buying levels for the month, leading to stock purchases rising to one of the strongest levels witnessed since 2005.
Indian economy is likely to perform better than earlier expected in the current fiscal, with most international organisation raising their forecast upwards. The International Monetary Fund, in its latest outlook, raised India’s FY25 growth forecast to 6.8% compared with 6.5% projected earlier.
This improved optimism also contributed to higher employment additions in the month, and quickest pace of job creation since September 2023.
On the cost front, there was good news for manufacturers as buoyant demand helped retain pricing power.
“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,” Bhandari said.
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