PMI data: India's manufacturing growth hits 10-month high in April

New Delhi: India’s manufacturing sector expanded at its fastest pace in 10 months in April, driven by strong demand and a sharp rise in output, a private survey released on Friday said.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 58.2 in April from 58.1 in March and 56.3 in February. The index was at 57.7 in January and 56.4 in December. A reading above 50 indicates expansion, and below 50 a contraction.

"Growth momentum in the Indian manufacturing industry improved in April, with output increasing at the fastest pace since June 2024 on the back of another strong expansion in order books," the survey said.

New export orders

"Total sales were supported by the second fastest upturn in international orders since March 2011. This positive trend was accompanied by notable rises in employment and purchasing activity," it added.

Despite rising only fractionally from 58.1 in March to 58.2 in April, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index showed the biggest improvement in the sector's health in 10 months.

"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," said Pranjul Bhandari, chief India economist at HSBC.

"Manufacturing output growth strengthened to a 10-month high on robust orders. Input prices increased slightly faster, 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," she added.

GDP growth rebounds

India’s economic growth rebounded in the December quarter after a slowdown in September but remained below the previous fiscal year’s pace. GDP grew 6.2% in Q3 FY25—the slowest since Q4 FY23, except for Q2 FY25’s revised estimate of 5.6%.

The National Statistics Office (NSO) has projected 6.5% GDP growth for FY25. A back-of-the-envelope calculation suggests growth will have to come in at 7.6% in the final quarter of the year to align with the NSO's second advanced estimate.

However, the International Monetary Fund (IMF) has cut its  India growth forecast for the fiscal year to 6.2% and slashed its global trade outlook as the US tariff war raises concerns worldwide. In October 2024 the IMF had predicted 6.5% growth for India in FY25, which it reiterated in January. The latest revision comes after similar cuts by the Asian Development Bank (ADB), Moody's Analytics and S&P Global.

Manufacturing output rose 3.5% in Q3 FY25, up from 2.1% in the prior quarter but significantly below the 14% and 7.5% recorded in Q4 FY24 and Q1 FY25, respectively. This sluggish growth weighed on overall GDP expansion.

Meanwhile, the latest manufacturing PMI survey reported that a sharp rise in new businesses—driven by stronger domestic and international demand—was the main driver of output growth, with the expansion rate, little changed from March, marking the second-strongest in nine months.

"Strong optimism regarding output prospects over the coming year was evident in the April data, driven by expectations of demand strength," the report said. "Marketing efforts, efficiency gains and new client enquiries also underpinned positive forecasts," it added.