Maintaining the position of the fastest growing economy in the world, India’s business activity in April rose to the highest level in nearly fourteen years due to robust demand driven by new business intakes and output. After posting strong expansion over the past few quarters in both manufacturing and service sectors, the growth in business output is at the fastest pace in the country. With the strong demand in almost all sectors, the highest-ever growth has been reflected in creating more jobs and easing input inflation as well, a private survey compiled by S&P Global and HSBC showed on Tuesday.
As per the survey, the flash India Composite Purchasing Managers' Index or PMI, climbed to 62.2 in the month of 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. “The strong expansion was led by services activity, with the index rising to a three-month high at 61.7 from March’s 61.2, thanks to new business — a key gauge for demand accelerating. Besides, the manufacturing PMI held strong at March's 59.1 this month,” the survey showed.
Commenting on the survey reports, Pranjul Bhandari, chief India economist at HSBC, said that 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. Meanwhile, both composite input and output prices moderated in April, albeit remaining robust,” Bhandari said.
“Besides, manufacturing margins also 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 the top economist at S&P Global and HSBC.
The survey further showed that in line with the recent trend, international sales positively contributed to total order books. “In fact, at the composite level, new export orders rose at the fastest rate since the series started in September 2014. On this front, services companies 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,” it said.
Despite persistently robust increases in new business, the survey showed that pressures on capacity remained mild in April. “Orders pending completion among private sector companies in India rose for the twenty-eighth month in a row, but at a slight pace that was weaker than that recorded in March. Efforts to meet rising demand supported jobs growth, which was the most pronounced in manufacturing where it increased at the fastest pace in one-and-a-half years. However, employment generation among services firms was slower than in March,” it showed.
