India's Manufacturing PMI expands to 54.7 in April 2022

2 May 2022 , 03:28 PM

The Indian manufacturing industry enjoyed a strong start to fiscal year 2022/23, posting marked and accelerated expansions in new orders and production. International sales grew solidly, following a contraction in March. Inflationary pressures meanwhile intensified, owing to rising commodity prices, the Russia-Ukraine war and greater transportation costs. Input prices increased at the fastest pace in five months, while output charge inflation hit a 12-month high.

Rising from 54.0 in March to 54.7 in April, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index® (PMI®) highlighted a solid and faster improvement in operating conditions across the sector. Growth gathered momentum in the intermediate and capital goods segments, but there was a slowdown at consumer goods makers.

The retreat of COVID-19 restrictions continued to support demand, according to survey participants. The rate of new order growth was marked, above trend and faster than that seen in March.

Echoing the trend seen for new business, the rate of output growth quickened in April and outpaced its long-run average. Moreover, the latest rise in production took the current sequence of uninterrupted increases to ten months. April data showed a rebound in new export orders, following the first contraction for nine months in March. The rate of increase was solid and the strongest since last July.

Pollyanna De Lima, Economics Associate Director at S&P Global, said: “The Indian manufacturing PMI remained well inside positive territory during April, recovering some of the ground lost in March. Factories continued to scale up production at an above-trend pace, with the ongoing increases in sales and input purchasing suggesting that growth will be sustained in the near-term.”

“Yet, the survey continued to show a lack of pressure on firms’ operating capacities alongside only mild job creation. Moreover, expectations regarding growth prospects remained subdued. “A major insight from the latest results was an intensification of inflationary pressures, as energy price volatility, global shortages of inputs and the war in Ukraine pushed up purchasing costs. Companies responded to this by hiking their fees to the greatest extent in one year. This escalation of price pressures could dampen demand as firms continue to share additional cost burdens with their clients,” Pollyanna De Lima added.