India's Manufacturing Sector Sustains Robust Growth Despite April's Moderation

India's manufacturing sector, a beacon of resilience, sustained robust growth in April despite a slight moderation from the previous month. The HSBC final India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, decreased to 58.8 in April, down from March's 16-year high of 59.1. Yet, the sector, with its unwavering performance, demonstrated its stability and reliability.

Although the April PMI figure was slightly below the initial estimate of no change, it still indicated significant expansion, marking the 34th consecutive month of growth. The PMI comfortably remained above the 50-mark, distinguishing growth from contraction.

Pranjul Bhandari, Chief India Economist at HSBC, emphasized that April's manufacturing PMI reflected the second-fastest improvement in operating conditions in three-and-a-half years, propelled by robust demand. Despite the marginal easing in output and new orders compared to March, both indexes still stood as the second-best readings in over three years, signalling robust demand both domestically and internationally.

Moreover, the manufacturing sector's positive outlook saw a significant upswing as companies anticipated sustained demand and ramped up production volumes for the next 12 months. This optimism translated into increased hiring for the second consecutive month, potentially addressing concerns about sluggish job growth in the country, instilling a sense of hope and positivity.

As businesses prepared for heightened production levels, they augmented their stocks of raw materials at the third-fastest rate since the survey's inception over 19 years ago. However, the surge in demand resulted in a modest increase in both input and output prices. Despite this, inflation remained within the central bank's target range of 2-6%.

Pranjul Bhandari noted, "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."

India's manufacturing sector, with its unwavering performance, maintained its robust growth trajectory in April. This growth was driven by strong demand both domestically and internationally, along with optimistic business sentiment and increased hiring, instilling confidence in its performance.