India's manufacturing sector has seen a significant growth in new orders and production levels, recording their strongest performance so far in 2023 during April, according to the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI). The PMI rose from 56.4 in March to 57.2, indicating improved business sentiment about output prospects for the coming year.
Manufacturers gained confidence that volumes will increase in the future, and new orders placed with goods producers rose at the quickest pace since last December. The workforce also expanded as firms sought to expand capacities by taking on additional workers and stockpiling inputs. However, overall job creation remained only slightly increased.
Within inputs, raw materials and semi-finished items' stocks also surged, and buying levels expanded for the 22nd successive month. The rate of expansion was the strongest since February 2021, and suppliers were able to deliver on the higher demand. Finished products' stocks depleted at the fastest pace this year as demand stayed resilient.
Output charges were raised at the sharpest pace in three months, with only 6% of the surveyed firms raising prices, while 92% of them left prices unchanged from the March level. Inflation in input costs accelerated, with manufacturers reporting higher operating costs in April. These cost increases were linked to fuel, metals, transportation, and some other raw materials.
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said, "Reflecting a robust and quicker expansion in new orders, production growth took another step forward in April. Companies also benefited from relatively mild price pressures, better international sales, and improving supply-chain conditions."
India's manufacturing sector plays a significant role in the country's economy, contributing around 16-17% of the country's GDP. The sector has been undergoing reforms, such as the Make in India initiative, to increase the manufacturing sector's contribution to the GDP. The government's efforts to create a more conducive environment for manufacturing, coupled with the sector's growth, indicate positive signs for India's economy.
