BENGALURU – India’s economic landscape is flourishing as business activity surged to its highest level in nearly 14 years this month, driven by robust demand and positive job growth. A recent survey released on Tuesday revealed encouraging trends, including easing input inflation, indicating India’s continued dominance as the fastest-growing major economy.
The flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global and HSBC, soared to 62.2 this month, surpassing March’s final reading of 61.8. This sustained expansion, consistently above the 50-mark threshold separating expansion from contraction since August 2021, underscores India’s resilience and vitality in the global economic arena.
Pranjul Bhandari, chief India economist at HSBC, commented on the remarkable performance, noting, “Strong performance in both the manufacturing and service sectors, led by increased new orders, resulted in the highest composite output index since June 2010.”
Services activity spearheaded the robust expansion, with the index reaching a three-month high of 61.7, up from March’s 61.2. This surge was fueled by accelerated new business, a pivotal indicator of demand, propelling India’s service sector to new heights.
Simultaneously, the manufacturing PMI remained robust at March’s level of 59.1, signaling sustained growth in output and new orders, albeit at a slightly slower pace than the previous month. International demand remained solid, driving the composite sub-index to its highest level since its inclusion in the survey in September 2014.
The bullish sentiment among businesses translated into an optimistic outlook for the next 12 months, rebounding from a four-month low in March. Efforts to meet burgeoning demand led to notable job growth, particularly in the manufacturing sector, which witnessed its fastest pace of employment increase in one-and-a-half years. However, job creation in the services industry lagged behind March’s figures.
While input costs cooled for both goods producers and service providers, strong demand dynamics enabled the pass-through of expenses to customers. Notably, manufacturing firms experienced a stronger increase in output costs compared to their services counterparts.
Bhandari emphasized the positive impact on manufacturing margins, stating, “Manufacturing margins improved in April as firms were able to pass on higher prices to customers due to strong demand conditions.”
Despite easing input inflation, inflationary pressures are expected to persist, potentially delaying any immediate rate cuts by the Reserve Bank of India. Price rises are likely to hover above the central bank’s 4% medium-term target for an extended period, underscoring the need for continued vigilance and prudent monetary policy measures.
