Private sector growth in April fastest in 14 years thanks to increase in demand: PMI

According to S&P Global’s composite purchasing managers’ index (PMI), the country’s private sector witnessed a further strengthening of economic growth in April, driven by positive demand trends. The expansion rates in both aspects, i.e. new business inflows and production, were the highest in almost 14 years. The PMI rose to 62.2 in April from 61.8 in March, marking the fastest increase in overall business activity since mid-2010.

While manufacturing continued to lead the recovery as in March, growth among good manufacturers slowed compared to accelerated growth among service providers. According to the PMI, a sustained increase in new orders put greater pressure on the capacity of manufacturing and service industries, which in turn supported hiring. Job growth was particularly stronger among manufacturing companies.

“Strong performance in both the manufacturing and services sectors, led by an increase in new orders, resulted in the highest composite manufacturing index since June 2010. In particular, services sector growth accelerated further in April as new orders increased both domestic and international markets rose. both composite input and output prices fell in April, although they remained robust. Manufacturing margins improved in April as companies were able to pass on higher prices to customers due to strong demand conditions. The overall future business outlook further improved in April, supported by robust demand,” said Pranjul Bhandari, chief India economist at HSBC.

According to the PMI, growth in India remained broadly based across both manufacturing and services sectors. Activity in the services sector has increased the most in three months.

Meanwhile, PMI suggests international sales contributed positively to the overall order book, with stronger sales in Africa, Asia, Australia, the Americas, Europe and the Middle East. New export orders rose at the fastest pace since September 2014.

However, despite continued strong growth in new production, capacity pressure in the private sector remained relatively low in April. The order backlog at companies increased for the 28th^e month in a row, albeit at a slower pace than in March.

“Nonetheless, efforts to meet rising demand and apparent backlogs supported further job creation at the start of the 2024/25 financial year. A slight increase in private sector employment masked notable differences at the sector level. While service providers at some point hired additional staff, at a marginal pace that was softer than in March, goods companies expanded their workforce the most in almost a year and a half,” PMI said.