The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index fell from 56.6 in November to 55.0 in December.
| Photo Credit: Reuters

Bolstered by current and anticipated upticks in demand, manufacturers reported higher confidence levels with expectations of higher output a year ahead. File (Representational image)
| Photo Credit: Reuters

India’s manufacturing sector activity moderated slightly in April, but still witnessed the second-best improvement in operating conditions in three-and-a-half years, as per the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) which fell to 58.8 from the 16-year high of 59.1 recorded in March.

A reading of over 50 on the index indicates growth in activity levels. There was a sharp rise in new orders which grew at the second-strongest pace in almost 40 months, with domestic demand rising faster than export orders. Output growth eased from March but was still the second highest in 42 months.

Bolstered by current and anticipated upticks in demand, manufacturers reported higher confidence levels with expectations of higher output a year ahead. Firms hired more employees at a pace that was moderate, but still the quickest since September 2023. However, the pressure on operating capacities remained mild.

Even though input costs increased, producers ramped up input purchases to the highest level since last June, and their expansion of stock inventories was the third-strongest since early 2005 when the PMI data collection began. Expectations that demand conditions will remain conducive to growth supported inventory-building initiatives, a statement on the index said.

Price increases were reported for materials like aluminium, paper, plastics and steel, and producers raised selling prices during April at the fastest pace in three months, noting that labour costs had also gone up.

“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,” said Pranjul Bhandari, chief India economist at HSBC.

The India Manufacturing PMI reading for April is milder than that signalled by the Flash PMI released on April 23 which was based on 75% to 85% of responses received from firms for the survey-based index. As per the flash reading, the manufacturing PMI was pegged at 59.1 in April, recording no change from March.

Representational image only.
| Photo Credit: The Hindu

 

Manufacturing firms’ order books and output levels expanded at the fastest pace in nearly three years this August, as per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) that rose to 58.6 last month from 57.7 in July. 

A reading of over 50 on the index reflects growth in activity levels and August was the 26^th month in a row that the PMI score was above 50.   

Though input costs escalated, firms replenished their inventories at the second highest pace in 18-and-a-half years and restrained from hiking selling prices in tandem with higher costs. Firms raised output costs at the slowest pace in four months, though input costs rose at the fastest pace in a year. 

New orders grew at the fastest pace since January 2021, with export demand seeing the sharpest uptick since November last year. Firms surveyed for the index reported that they had secured new work from clients in Bangladesh, China, Malaysia, Singapore, Taiwan and the U.S. 

To cope with the additional work flow, Indian manufacturers reportedly hired a combination of permanent and temporary staff on both part- and full-time bases. However, overall employment grew at the slowest pace in four months. 

“The presence of stronger cost inflationary pressures serves as a reminder of the challenges inherent in managing growth. Firms addressed rising input prices by lifting selling charges. However, the need to maintain competitiveness helped restricted charge inflation,” noted Pollyanna De Lima, economics associate director at S&P Global Market Intelligence. 

With the manufacturing PMI painting a vibrant picture of the sector in August, Ms. De Lima reckoned the sector looks set to provide a strong contribution to economic growth in the second quarter of 2023-24. Manufacturing GVA (Gross Value Added) grew 4.7% in the first quarter (April to June 2023) as per estimates released by the National Statistical Office on August 31.

“Companies’ strategic focus towards a global orientation were evident via a sharp and quicker expansion in international sales. Export-centric tactics should help ensure that production remains on an upward path in the coming months,” Ms. De Lima said.