Private sector PMI climbs to 14-year high in April

India’s economic growth in the private sector expanded at its fastest pace in nearly 14 years this month as positive demand trends fueled new business intakes and output, HSBC flash India PMI data showed.

The manufacturing industry led the latest upturn, as was the case in March, although softening growth at goods producers compared with accelerations at service providers, data showed.

“Strong performance in both the manufacturing and service sectors, led by increased new orders, resulted in the highest composite output index since June 2010. In particular, services growth accelerated further in April as new orders in both domestic and international markets rose,” Pranjul Bhandari, chief India economist at HSBC, said.

HSBC flash India composite purchasing managers index (PMI) compiled by S&P global rose to 62.2 this month from 61.8 in March.

The reading which suggests contraction from extraction is consistently above 50-mark since August 2021.

Services activity rising to three months high at 61.7 from 61.2 of March led the strong expansion as new orders in both domestic and international markets rose.

Manufacturing PMI held strong at 59.1 this month as output and new orders for goods continued to grow at robust pace though slightly on a lower side than last month.

International sales positively contributed to total order books and at the composite level, new export orders rose at the fastest rate since the series started in September 2014. 

Service companies on this front noted the quicker rate of expansion. Anecdotal evidence pointed to stronger sales to clients in Africa, Asia, Australia, the Americas, Europe, and the Middle East.

Amid robust growth, panelists expect further improvements in demand and productivity over the course of the coming 12 months.

On the employment front, the survey showed sustained increases in new orders added pressure on the capacity of manufacturing firms and their services counterparts, which in turn underpinned recruitment. Jobs growth was notably stronger among the former. 

However, employment generation was softer than in March though goods producers raised workforces to the greatest extent in nearly a year-and-a-half.

Meanwhile, both composite input and output prices moderated in April, albeit remaining robust. 

“Manufacturing margins improved in April as firms were able to pass on higher prices to customers due to strong demand conditions. In fact, manufacturing industries sharply increased their staffing levels and input buying activity. Overall future business outlook improved further in April, buoyed by robust demand,” added Bhandari.

On the inflation front, the survey’s price measures showed slower rates of inflation for both aggregate input costs and output charges.

India’s gross domestic product (GDP) expanded by 8.4% in the October-to-December quarter, beating analysts’ estimates by a wide margin, as the country remained the fastest growing major economy.

The Reserve Bank of India (RBI) expects the economy to grow at 7% in FY25, while the government estimates India to grow at 7.6% in FY24.