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India's Manufacturing PMI Rises to 54.7 in April, Inflation Pressures Mount

India's manufacturing PMI rose to 54.7 in April, up from 53.9 in March, but still marking the second-slowest improvement in operating conditions in nearly four years. The Middle East conflict is driving significant inflation pressures, with input costs rising at the fastest pace since August 2022 and output prices at a six-month high. Despite these challenges, new export orders expanded at the fastest pace since last September, driven by demand from markets including Australia, France, and the UK. Employment reached a ten-month high as manufacturers continued expansion plans despite cautious inventory management.

Key Points: India Manufacturing PMI Edges Up to 54.7 in April: HSBC

  • PMI rises to 54.7 from 53.9
  • Second-slowest improvement in 4 years
  • Input costs rise at fastest pace since August 2022
  • New export orders grow at fastest pace since September
3 min read

India manufacturing PMI edges up to 54.7 in April; Second-slowest improvement in operating conditions in four years: HSBC

India's manufacturing PMI rose to 54.7 in April, marking second-slowest improvement in 4 years. Inflation pressures rise due to Middle East conflict.

"Spillovers from the Middle East conflict are becoming more evident, particularly through inflation - Pranjul Bhandari"

New Delhi, May 4

India's manufacturing PMI rose to 54.7 in April, up from 53.9 in March, but still marking the second-slowest improvement in operating conditions in nearly four years. According to HSBC India Manufacturing PMI, while new business intakes and production saw mild recoveries, the rates of increase remained among the weakest since 2022.

The report noted that advertising and demand resilience supported sales and production, yet growth faced hurdles from competitive conditions, the West Asia war, and a reluctance among clients to approve pending quotes.

"The two largest sub-components of the PMI, new orders and output, rose since March but trailed readings seen in at least three-and-a-half years," the report noted.

International demand provided a bright area for the sector as new export orders expanded at the "fastest pace since last September." Firms reported improved interest from several global markets, including Australia, France, Japan, mainland China, and the United Kingdom.

However, the ongoing conflict in the Middle East exerted significant upward pressure on inflation. "Input costs and output charges rose at the quickest rates in 44 and six months respectively," the report stated. "Amid reports of higher prices for aluminium, chemicals, electrical components, fuel, leather, petroleum products and rubber, average cost burdens rose further in April."

The overall rate of inflation reached its highest level since August 2022. This prompted goods producers to lift their fees to the greatest extent in half a year to protect their margins. Consumer goods stood out as the only category where cost inflation slowed, although the rate in this sub-sector still surpassed others and led the rankings for output charge inflation.

Pranjul Bhandari, Chief India Economist at HSBC, said, "India's manufacturing PMI rose to 54.7 in April, up from 53.9 in March, but still marking the second-slowest improvement in operating conditions in nearly four years. Spillovers from the Middle East conflict are becoming more evident, particularly through inflation: input costs increased at the fastest pace since August 2022, and output prices rose at the quickest rate in six months. Even so, output, new orders (including exports) and employment all grew moderately, pointing to continued resilience in India's manufacturing sector."

Despite a cautious approach to inventories, which grew at the slowest pace in nearly five years, manufacturers increased their recruitment efforts. Job creation reached a ten-month high as companies moved forward with expansion plans.

At the same time, lead times for inputs improved, which manufacturers associated with better coordination with both new and existing suppliers. The extent of this improvement in delivery times was historically strong for the period.

"The overall level of positive sentiment slipped since March, though it was at its second-highest mark since November 2024," the report said.

Indian manufacturers maintained a positive outlook for growth prospects over the coming year. "Confidence was pinned on hopes that marketing efforts will bear fruit and that pending projects will be approved," the report mentioned.

- ANI

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Reader Comments

V
Vikram M
Good to see export orders are picking up with demand from Australia, France, Japan and so on. But the internal growth is still sluggish. As a small manufacturer, I can tell you clients are dragging their feet on approvals. The "pending quotes" problem is real. We need more domestic demand to truly sustain this.
J
James A
Competition is brutal these days. Most companies are struggling to maintain margins while keeping clients happy. The fact that employment hit a ten-month high is perhaps the only silver lining here. At least people are getting jobs even if the growth isn't stellar. Let's hope the optimism about future projects materializes.
A
Aman W
The West Asia war is really messing up global supply chains. Aluminium, chemicals, petroleum products all going up. If the conflict continues, our manufacturing will face more headwinds. The government should think about alternative sourcing and maybe give some support to MSMEs hit by these cost increases.
S
Sarah B
Confused by this report honestly. PMI up, employment up, exports up, but also inflation at a high and confidence slightly down. It's like we're walking on a tightrope. I think the market is resilient but we need the Middle East situation to stabilize. Otherwise the next few months could be tricky for manufacturers.
R
Raghav A
The second-slowest improvement in four years is a concern. But the fact that consumer goods are still leading output charge inflation means we the end consumers are paying a high price. I wish the report had more data on how this impacts the aam aadmi. What's the point of a PMI if our monthly budget is under pressure?

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