India Clocks Fastest Business Activity Expansion In 14 Years, Check Out April's PMI Data Here

The HSBC Flash India Services PMI Business Activity Index climbed to 61.7 in April, against 61.2 in March, while the Manufacturing PMI for April remained the same as March at 59.1

The business activity in India and economic growth across the private sector continued to expand rapidly as the HSBC Flash India Composite Purchasing Managers’ Index (PMI) climbed to 62.2 in April, against the 61.8 reading clocked in the preceding March month.

Compiled by S&P Global, the survey found that the business activity in the country grew at its fastest pace in almost 14 years. Favourable demand trends helped increase business intakes and output. The Composite PMI index is seasonally adjusted and helps evaluate the monthly change in the overall output of the manufacturing and service sectors in the country.

The economy saw growth spread across the manufacturing and service sectors. The HSBC Flash India Services PMI Business Activity Index climbed to 61.7 in April, against 61.2 in March, while the Manufacturing PMI for April remained the same as March at 59.1.

However, the manufacturing sector dominated the pace, following the sentiment from March. The sector clocked a sharper rate of increase. At the same time, the services sector saw business activity climb to the highest in three months. The survey found that growth eased for goods producers, and accelerated for service providers.

 In terms of job generation, the manufacturing sector outpaced the services sector. Service providers recruited at a marginal pace, while goods producers expanded their workforce to the greatest extent in almost a year and a half. Consistent increases in new orders put the pressure on capacity of manufacturers and their services counterparts. 

“Private sector sales expanded for the thirty-third successive month in April and at the quickest pace in just under 14 years. As was the case for output, a faster increase in the services economy compared with softer growth at goods producers (but they nevertheless registered the sharper upturn),” the survey found.

While the prices of Indian goods and services grew at a muted pace in April, the inflation rate stood above its long-run average. The survey found that robust demand helped pass on the increase in expenses to clients. 

Elaborating on the findings, Pranjul Bhandari, Chief India Economist, HSBC, noted, “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.”

The survey is compiled by S&P Global with responses to questionnaires shared with survey panels including about 400 manufacturers and service providers each. The responses are collected in the latter half of the month and reflect the changing trends in comparison to the previous month.