S&P Global PMI signals Indian manufacturing hit a four-month peak in April

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For India’s manufacturing sector, new orders and production levels recorded their strongest growth so far in 2023 during April as per the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI), which rose to 57.2 from 56.4 in March.

Overall business sentiment about output prospects a year ahead, improved from an eight-month low in March, as manufacturers gained confidence that volumes will be higher going forward. New orders placed with goods producers rose at the quickest pace since last December.

After a fractional reduction in the workforce in March, April saw a reversal of trend as firms sought to expand capacities by taking on additional workers and stockpiling inputs. However, while overall job creation was “only slight”, producers resorted to a record expansion in inventories of inputs in April.

Within inputs, raw materials and semi-finished items’ stocks also surged. “Not only did buying levels expand for the 22nd successive month, but also at a sharp rate that was the strongest since February 2021,” S&P Global noted, adding that suppliers were able to deliver on the higher demand.

Finished products’ stocks, on the other hand, depleted at the fastest pace this year, as demand stayed resilient, as per the firms surveyed for the PMI. Output charges were raised at the sharpest pace in three months — but only 6% of the surveyed firms raised prices, while 92% of them left prices unchanged from March level.

Inflation in input costs accelerated afresh — with manufacturers reporting higher operating costs in April. These cost increases were linked to fuel, metals, transportation and some other raw materials.

“Reflecting a robust and quicker expansion in new orders, production growth took another step forward in April. Companies also benefited from relatively mild price pressures, better international sales and improving supply-chain conditions,” 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,” she pointed out.