With a rise in new export orders post US’ tariff decision, India’s manufacturing sector showcased a better performance in April as the Purchasing Managers’ Index (PMI) increased to 58.2. It is a tad higher than 58.1 of March.
“The headline figure was spurred by faster increases in stocks of purchases, employment and production,” a statement by S&P Global said. The index is prepared on the basis of responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. Index rising above 50 indicates expansion, while dropping below 50 means contraction.
Manufacturing is considered as India’s largest job multiplier. It has a share of 17 per cent in the GDP (Gross Domestic Product). A better performance in manufacturing signals good growth expectations for industry and the economy.
“The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements,” Pranjul Bhandari, Chief India Economist at HSBC, said.
Further she added that manufacturing output growth strengthened to a 10-month high on robust orders. It may be noted that as US has imposed higher tariffs on imports from China while pausing reciprocal tariffs for India, fresh orders are being placed to expedite the export consignment.
The statement said that robust demand for Indian goods boosted firms’ pricing power, with selling charges hiked to the greatest degree since October 2013. This was despite a modest uptick in input costs, but “the impact on margins could be more than offset by the much-faster rise in output prices, of which the index jumped to the highest level since October 2013,” Bhandari said.
Talking about the job scenario, the statement said that manufacturers continued to enhance their staffing levels in April to meet growing output requirements. Exactly 9 per cent of survey participants took on extra workers, with a combination of permanent and temporary contracts reportedly being offered. The rate of job creation was marked by historical standards, it said.
Respondents also expressed optimism for the future. “Strong optimism regarding output prospects over the coming year was evident in the April data, driven by expectations of demand strength. Marketing efforts, efficiency gains and new client enquiries also underpinned positive forecasts,” the statement concluded.