Economic growth in India’s private sector continued to strengthen in April with the manufacturing sector leading the upturn. The latest S&P Global HSBC Flash India PMI data reveals positive trends in demand with business intakes and output rising at the fastest rate in almost 14 years. The survey also reveals an increase in the headline HSBC Flash India Composite PMI Output Index from 61.8 in March to 62.2 in April, reflecting the fastest rate of increase in aggregate business activity since mid-2010.
Manufacturing sector propels growth
New orders in India’s manufacturing and services sector added pressure on capacity, which in turn propelled recruitment. However, the manufacturing sector saw a stronger increase in employment. The PMI survey also noted a slower rate of inflation for both aggregate input costs and output charges.
Growth in India remained broad-based in both the manufacturing and services sectors. However, the manufacturing sector saw a stronger increase, although it recorded softer levels compared to March 2024. In India’s service sector, business activity rose to the largest extent in three months.
Sales in the private sector increased for the 33rd month in a row in April and at the quickest pace in just under 14 years. Moreover, the increase in the service economy and the softer growth at goods producers still increase output. International sales also contributed to India’s order books with new export orders rising at the fastest pace since September 2014.
“Manufacturing margins improved in April as firms were able to pass on higher prices to customers due to strong demand conditions. In fact, manufacturing industries sharply increased their staffing levels and input buying activity,” stated Pranjul Bhandari, chief India economist at HSBC.
Private sector employment rises
India saw a slight increase in private sector employment in April, which overshadowed the notable divergences at the sector level. India’s service providers marginally raised employment while the manufacturing sector raised the workforce to the largest extent in nearly a year and a half.
Moreover, India’s manufacturing sector significantly increased input buying to a 10-month high in April. Notably, input cost inflation declined in both the manufacturing and services sectors, with the latter noting a faster rise. Although prices increased to a lesser extent in April, inflation remained above the long-term average.
Finally, India’s PMI data revealed an increase in business confidence in April. The composite Future Output Index rose from March’s four-month low to above the series average. The PMI report expects further improvements in demand and productivity during the coming 12 months.
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