India's business activity surges to 14-year high in April: PMI data

Driven by robust demand in both manufacturing and service sectors, PMI in April climbed to 62.2 from March's final reading of 61.8

Business activity in April expanded at its fastest pace in nearly 14 years, propelled by strong demand, said a private report on Tuesday.

The HSBC Flash India PMI indicated positive job growth and a decline in input inflation, suggesting India is positioned to maintain its status as the fastest-growing major economy this year.

The flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global and HSBC, climbed to 62.2 in April compared to March's final reading of 61.8. A reading above the 50, which separates expansion from contraction, has been observed since August 2021.

Pranjul Bhandari, chief India economist at HSBC, said the strong performance in manufacturing and service sectors, driven by increased new orders, had resulted in the highest composite output index since June 2010.

Bhandari said, “In particular, services growth accelerated further in April as new orders in both domestic and international markets rose. 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.”

Services activity led the expansion, with the index reaching a three-month high at 61.7, driven by accelerated new business, indicating robust demand. Separately, manufacturing PMI remained strong at 59.1 in April, with output and new orders for goods continuing to grow, albeit at a slightly slower pace than last month.

International demand remained strong during the month which contributed to the highest composite sub-index since its addition to the survey in September 2014. Strong sales have also bolstered the business outlook for the next 12 months, after a four-month low in March.

Manufacturing, particularly, saw efforts to meet the rising job demands. However, employment generation among services firms slowed compared to March.

While input costs cooled for both goods producers and service providers, strong demand allowed businesses to pass on expenses to customers. Manufacturing margins improved in April as firms were able to pass on higher prices due to robust demand conditions.