Economic growth across India's private sector continued to strengthen in April, rising to the highest since June 2010, according to the HSBC Flash India PMI data. Rising from 61.8 in March to 62.2 in April, the headline HSBC Flash India Composite PMI Output indicated the fastest rate of growth in aggregate business activity since mid-2010.
The manufacturing industry led the latest upturn, with sustained increases in new orders adding pressure on the capacity of manufacturing and service firms.
HSBC Flash India Services PMI Business Activity Index: 61.7 (March final: 61.2)
HSBC Flash India Manufacturing PMI Output Index: 63.2 (March final: 63.3)
HSBC Flash India Manufacturing PMI: 59.1 (March final: 59.1)
Survey participants overwhelmingly attributed the expansion to buoyant demand from domestic and external clients.
In the service economy, business activity rose to the greatest extent in three months. Private sector sales increased for the 33rd consecutive month in April, the fastest pace in just under 14 years.
In line with the recent trend, international sales positively contributed to total order books. In fact, at the composite level, new export orders rose at the fastest rate since the series started in September 2014. On this front, service companies noted the quicker rate of expansion.
Despite persistently robust increases in new business, pressures on capacity remained mild in April. Private sector companies in India saw a rise in orders pending completion for the 28th consecutive month, albeit at a slightly slower pace than in March.
Yet, efforts to meet rising demand and clear backlogs supported further job creation. 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 their workforces to the greatest extent in nearly a year and a-half.
Manufacturers also substantially stepped-up input buying, with growth climbing to a ten-month high. Input cost inflation receded at both manufacturing companies and their service counterparts, with the latter noting the faster rise.
Anecdotal evidence suggested that labour costs were the main factor behind rising expenses at service providers. At the composite level, the rate of increase was below its long-run average. Although prices for Indian goods and services rose to a lesser extent in April, inflation remained above its long-run average.
According to survey participants, demand strength enabled clients to pass on rising expenses. A stronger increase in the manufacturing industry contrasted with a slowdown at service firms.
Finally, the latest results showed a pickup in business confidence during April. The composite Future Output Index rose from March's four-month low and was above the series average (since April 2012). Panellists expect further improvements in demand and productivity over the course of the coming 12 months.
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