India’s manufacturing sector kicks off FY24 on a positive note on the back of improved order book as well as growth in the production. According to data released by S&P Global Market on Monday, the country’s manufacturing Purchasing Managers’ Index (PMI) rose to a four-month high of 57.2 in April against 56.4 in March.

Manufacturing sector has a share of over 15 per cent in gross value added and has been considered as a job multiplier. The PMI is one of the high frequency economic indicators and used widely in policy making. It is based on the opinion shared by purchasing executives in 400 companies and prepared by S&P Global Market.

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Commenting on the latest number, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said the figures are a reflection of growing order book of the industry. Companies also benefited from relatively mild price pressures, better international sales and improving supply-chain conditions.

“It seems like Indian manufacturers have abundant opportunities to keep powering ahead. Besides seeing the strongest inflow of new work in 2023 so far, capacities were expanded through job creation, input buying was lifted and pre-production inventories rose at a record rate. At the same time, stocks of finished goods need replenishing as some orders were reportedly fulfilled from warehoused goods,” she said.

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However, job situation did not improve much last month. Report accompanying PMI said that goods producers recorded a marginal increase in outstanding business volumes. Still, “firms sought to expand capacities by taking on additional workers. Although only slight, the latest upturn in employment compared with a fractional reduction in March,” it said.

Although manufacturers signalled higher operating costs in April—linked to fuel, metals, transportation and some other raw materials — the overall rate of inflation remained below its long-run average despite quickening since March. Charge inflation also quickened in April, reaching a three-month high and matching its long-run average. However, while 6 per cent of companies hiked their fees since March, 92 per cent left them unchanged, added the report.

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The report also highlighted that Indian manufacturers were confident that production volumes would be higher in 12 months’ time, amid demand resilience, client enquiries, orders pending approval and marketing efforts. Moreover, the overall level of positive sentiment rose since March.

“Manufacturers are certainly upbeat towards growth prospects, with optimism improving from March’s eight-month low on the back of contracts pending approval, rising client enquiries, marketing initiatives and evidence of demand resilience,” De Lima said.

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