India’s manufacturing activities in April expanded at their fastest pace in four months driven by robust demands, signalling encouraging outlook for the coming months, an industry survey showed.
Purchasing Managers' Index (PMI) for manufacturing, compiled by S&P Global, rose to 57.2 in April from 56.4 in the previous month, the best performance in the calendar year 2023.
Factory orders and production rose at the strongest rates in 2023 so far, more jobs were created and companies stepped up input purchasing owing to stock-replenishment efforts, S&P Global said in the monthly survey report released on Monday.
Supported by a lack of pressure on supplier capacity, there was a record expansion in inventories of inputs in April, it added.
The PMI print above 50 indicates growth in the sector while below 50 shows contraction. Manufacturing PMI showed expansion in the sector for 23 months in a row.
April data indicates encouraging trends for the months to come. “It seems like Indian manufacturers have abundant opportunities to keep powering ahead,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Besides seeing the strongest inflow of new work in 2023 so far, capacities were expanded through job creation, input buying was lifted and pre-production inventories rose at a record rate. At the same time, stocks of finished goods need replenishing as some orders were reportedly fulfilled from warehoused goods, she said.
As per the survey, Indian manufacturers are confident that production volumes would be higher in 12 months' time. This is supported by demand resilience, client enquiries, orders pending approval and marketing efforts.
“Manufacturers are certainly upbeat towards growth prospects, with optimism improving from March's eight-month low,” De Lima said.
Although manufacturers signalled higher operating costs in April — linked to fuel, metals, transportation and some other raw materials — the overall rate of inflation remained below its long-run average.
Charge inflation also quickened in April, reaching a three-month high and matching its long-run average. While 6% of companies hiked their fees since March, 92% left them unchanged, the survey data showed.
Robust new business growth and an associated increase in production requirements urged manufacturers to add to their input inventories in April. The rate of stock accumulation during the month climbed to a survey peak.
Companies also benefited from relatively mild price pressures, better international sales and improving supply-chain conditions.