April private sector growth fastest in 14 yrs on demand boost: PMI
The country’s private sector witnessed a further strengthening of economic growth in April, driven by positive demand trends, according to the HSBC Flash India composite purchasing manager’s index (PMI) by S&P Global. Expansion rates in both aspects i.e. new business intakes and output,were the highest in nearly 14 years. The PMI rose to 62.2 in April as against 61.8 in March, thus indicating the fastest rate of increase in aggregate business activity since mid-2010.
While the manufacturing industry continued to lead the upturn as it did in March, there was a noted softening of growth amongst good producers compared to the accelerated growth seen among service providers. According to the PMI, a sustained increase in new orders added pressure on the capacity of manufacturing firms and service firms, which in turn underpinned recruitment. The job growth was notably stronger amongst the manufacturing firms.
"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. Manufacturing margins 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," says Pranjul Bhandari, chief India economist, HSBC.
As per the PMI, growth in India remained broad-based across both manufacturing and services sectors. The business activity in the service sector rose to the greatest extent in three months.
Meanwhile, PMI suggests that international sales positively contributed to the total order books with stronger sales in Africa, Asia, Australia, America, Europe and the Middle East. New export orders rose at the fastest rate since September 2014.
However, despite experiencing consistently strong growth in new business, capacity pressures in the country’s private sector remained relatively low in April. The backlog of orders among the companies increased for the 28th consecutive month, albeit at a slower pace compared to March.
"Yet, efforts to meet rising demand and clear backlogs supported further job creation at the start of the 2024/25 fiscal year. A slight increase in private sector employment masked notable divergences at the sector level. While service providers took on extra staff at a marginal pace that was softer than in March, goods producers raised workforces to the greatest extent in nearly a year-and-a-half," says PMI.