India’s Manufacturing Activity in April: Second Strongest in 3.5 Years

India’s manufacturing sector has continued its robust performance into the first quarter of the new fiscal year, maintaining its momentum from the previous year’s stellar showing. In April, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) revealed a buoyant picture, with manufacturing activity registering its second strongest expansion since early 2021.

Strong Demand Drives Growth

Manufacturers in India experienced robust demand for their products both domestically and internationally. Total new orders surged significantly, marking the second strongest expansion since the beginning of 2021. This growth was fueled by healthy demand trends and effective marketing strategies.

Cost Pressures and Inflation

Despite the positive growth trends, there were upward pressures on costs, primarily driven by increases in raw material prices and labor costs. As a result, inflation reached its highest level since January. However, firms managed to maintain resilience by passing on these cost increases to consumers through higher output charges, thereby improving margins.

Employment Market Responds

The buoyancy in demand also translated into improvements in the employment market, with manufacturers increasing hiring at the beginning of the new quarter. While the pace of job creation was moderate, it was nevertheless the quickest since September 2023.

Increased Purchasing and Vendor Performance

April saw a rise in raw material stocks, supported by increased buying—the most significant since June last year. Moreover, suppliers demonstrated improved performance, with timely delivery of items for the second consecutive month.

Optimistic Outlook

Looking ahead, Indian goods producers are optimistic about the future, forecasting higher output in the coming year. Opportunities in advertising and brand recognition are also seen as potential growth drivers for the sector.