India's Manufacturing PMI Dips to 58.8 in April from March's 16-Year High

Manufacturing PMI: India's manufacturing sector experienced a slight downturn in April, following the remarkable performance seen in March when it hit a 16-year high. The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, dropped to 58.8 in April from 59.1 in March.

Despite this decline, the PMI still indicated a strong improvement in the sector's health, marking the second-best reading in 3.5 years. It remained comfortably above the neutral mark of 50.0 and surpassed its long-run average of 53.9.

The Indian manufacturing sector has kicked off the first fiscal quarter with remarkable vigour, according to the HSBC India Manufacturing Purchasing Managers' Index (PMI). Operating conditions saw the second-fastest improvement in three-and-a-half years, propelled by buoyant demand. This surge in demand translated into sharp increases in new business intakes, prompting firms to ramp up production levels. As a result, buying activity soared to a ten-month high, with input stocks reaching levels not seen in over 19 years.

The expansion of raw material stocks, supported by increased purchasing, was a notable highlight, alongside improved supplier performance. Both domestic and external demand for Indian goods remained strong, with total new orders experiencing significant growth.

Business confidence received a boost as firms expanded staffing levels, anticipating continued positive demand trends. Despite a modest uptick in input costs driven by higher raw material and labour costs, inflation remained below historical averages. However, firms mitigated these cost pressures by passing them onto consumers through higher output charges, resulting in improved margins.

Export orders also saw an uptick, albeit at a softer rate compared to domestic sales, underscoring the resilience of the domestic market. Looking ahead, Indian manufacturers are optimistic about higher output levels and expect demand to remain buoyant.

To meet growing demand, additional staff were hired at the fastest pace since September 2023. While cost pressures intensified, inflation remained below its long-run average. Responding to higher costs, manufacturers raised selling prices, with the rate of charge inflation reaching a three-month high.