By Siddhi Nawar
India's manufacturing activity continued to strengthen in April, with the HSBC India Manufacturing PMI registering a slight rise to 58.2 from 58.1 in March. Though the gain was modest, it marked the best performance for the sector in the last ten months, reflecting ongoing improvements in output, new business, hiring, and input purchases.

Fastest Output Growth Since June 2024
Production levels climbed at the fastest pace since June 2024, supported by a surge in both domestic and overseas demand. Firms noted especially strong growth in the consumer goods segment, and export orders rose at the second-highest rate since March 2011, driven by demand from regions including Africa, Asia, Europe, the Middle East, and the Americas.

Employment and Purchasing Expand
To meet this rising demand, companies expanded their workforce, with 9% of respondents indicating they had increased staff—often through a mix of temporary and permanent contracts. Purchasing activity also rose sharply, aided by efforts to build up inventories.

As a result, pre-production stocks grew at the quickest rate in eight months, while finished goods inventories declined at the steepest pace in over three years, suggesting rapid turnover and shipping.

Pricing Power Up
Firms raised selling prices significantly, recording the sharpest uptick since October 2013, as strong demand allowed them to pass on higher input costs, which saw their fastest increase in four months.

Businesses cited cost pressures from materials like steel, rubber, leather, and paper, as well as higher transport and maintenance expenses. Nonetheless, the rate of input inflation remained moderate compared to the pace of increase in output prices. Overall, inflation hit its highest level in over 11 years.

Backlogs and Stock Trends
There was also a rise in work backlogs, indicating capacity pressures, with the rate of accumulation reaching its highest level since early 2024. Delivery times from suppliers improved marginally for the third month in a row, reflecting stable supply conditions.

Looking ahead, businesses expressed strong confidence about future output, citing robust demand forecasts, improved marketing efforts, and increased client engagement as key reasons for optimism.

In summary, April data signals continued resilience and momentum in India’s manufacturing economy, with broad-based gains positioning the sector well for sustained expansion in the coming months.

Commenting on April's manufacturing performance, Pranjul Bhandari, Chief India Economist at HSBC, expressed "The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements. Manufacturing output growth strengthened to a ten-month high on robust orders. Input prices increased slightly faster, but the impact on margins could be more than offset by the much-faster rise in output prices, of which the index jumped to the highest level since October 2013."

Movement of Manufacturing PMI in FY25