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Economy - May 3, 2025

April Sees Indian Manufacturing at Highest Level Since June 2024, Bolstered by Exports and Recruitment

 April Sees Indian Manufacturing at Highest Level Since June 2024, Bolstered by Exports and Recruitment

 

Sustained global demand, strong consumer goods output, and accelerated job creation drive India’s factory activity to its highest level since June 2024.

Introduction

India’s manufacturing engine is gaining speed again. In April 2025, the country’s factory activity hit a 10-month high, buoyed by robust demand for exports, solid consumer goods production, and a renewed focus on employment. The manufacturing performance index by HSBC for India ticked up to 58.2 in April, compared to 58.1 in March, indicating persistent growth and optimism among firms.
This latest growth marks the most significant upswing since June 2024 and offers a strong indication that India’s industrial sector is positioned to remain a key pillar of economic growth in the coming quarters.

April PMI Signals Strong Sector Performance

April’s PMI stood at 58.2, comfortably exceeding the 50 threshold that differentiates economic growth from downturn. This performance reflects broad-based improvement across manufacturing, including rising output, increased new orders—especially from abroad—and growing employment.
According to HSBC’s monthly PMI survey, April witnessed one of the strongest increases in international sales in over a decade. International demand surged, marking the second most rapid rise in export bookings since March 2011, with notable interest from buyers in Asia, Europe, and the U.S.
This uptick in global orders has injected fresh momentum into India’s production lines, particularly in the consumer goods segment, which saw the sharpest acceleration among all categories.

Exports Fuel Manufacturing Growth

One of the primary drivers of this manufacturing boost has been the resurgence in export demand. Global economic stability and India’s competitive edge in cost-effective production have led to a surge in overseas orders. Many Indian manufacturers reported increased sales to foreign clients, noting that favorable pricing, quality standards, and quicker turnaround times enhanced their attractiveness in international markets.
This robust export activity not only helped boost order books but also gave firms confidence to invest in production upgrades and expand their capacity to meet the rising demand.

Hiring and Capacity Expansion on the Rise

A notable aspect of April’s manufacturing report is the significant momentum in employment. Businesses expanded their workforce at the quickest rate in almost two years, reflecting confidence in continued demand growth. Both permanent and contractual positions saw increases, with manufacturers citing the need to expand workforces to handle higher order volumes and longer production cycles.
This trend reflects a broader improvement in India’s labor market and suggests that the benefits of industrial expansion are beginning to ripple into the wider economy. Additionally, firms ramped up their input purchases and expanded their inventories to keep up with production needs.

Input Costs and Pricing Trends

While the sector experienced strong output growth, firms also faced some inflationary pressures. Input costs rose in April due to higher prices for raw materials such as metals and chemicals. However, most companies managed to pass these costs on to customers by raising selling prices at the fastest rate in over a year.
Despite these cost increases, business sentiment remained high, with many manufacturers expecting demand to stay strong throughout the year. Firms also reported better vendor performance and improved supply chain conditions, helping to smooth operations and avoid production bottlenecks.

Sectoral Performance: Consumer Goods Lead the Way

Among the various sub-sectors, the consumer goods industry stood out with the strongest growth. Stronger household consumption, festival-driven purchasing, and sustained export growth played key roles in lifting production output. Capital goods and intermediate goods also recorded steady improvements, reflecting balanced growth across industry verticals.
The sustained growth in consumer demand, both at home and abroad, highlights the sector’s resilience and its ability to capitalize on shifting market trends.

Conclusion: A Promising Outlook for Indian Manufacturing

April 2025 marked a turning point for India’s manufacturing sector, which surged ahead with its fastest growth rate in 10 months. Backed by strong global demand, rising consumer goods output, and encouraging employment trends, the sector is signaling durable economic health.
Looking ahead, manufacturers remain optimistic about business prospects over the next 12 months. As export demand continues and hiring gains traction, the sector is poised for steady expansion—further strengthening India’s post-pandemic economic rebound and reinforcing its role as a key global manufacturing hub.

 

 

 

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India's Manufacturing Growth Slows in August, PMI Hits 3-Month Low at 57

India’s Manufacturing Growth Slows in August, PMI Hits 3-Month Low at 57

In August, companies reported weaker growth in output and new orders, which brought the expansion of India’s manufacturing sector to a three-month low. According to HSBC’s most recent data, which was made published on Monday, the Purchasing Managers’ Index (PMI) fell from 58.1 in July to 57.5 in August. Even if the sector’s growth is still good, this fall signals that it is losing some of its movement. Increase is indicated by an index number higher than 50.

Softer Growth in New Orders and Output: The August report makes clear that the rate of growth in new business and production for Indian manufacturers decreased. When compared to historical averages, the expansion rates are still substantial despite this slowdown. The poll indicates that while companies are still growing, the rate of growth has slowed. Some businesses have blamed the slower pace on intense competition, which has been linked to this in part. Regarding output, although production levels remained elevated, the growth rate decelerated to its lowest point since January of this year. While demand wasn’t as high as it had been in prior months, some businesses pointed out that technological investments and increased sales volumes helped maintain production levels.

Impact on the International Market and Reduced Demand: According to the poll, the two main measures of demand output and new orders reached their lowest points in seven months. While still healthy overall, international demand grew at its slowest rate since January. This implies that although the industry is still growing, it is not doing so as quickly as it formerly did on a national and worldwide level.

Focussing on the current situation, HSBC Chief India Economist Pranjul Bhandari noted that output and new order patterns closely followed the PMI’s overall trend. According to Bhandari, the industry is still performing well by historical standards, but several companies blamed the decline on intense competition.

Price inflation remains despite easing cost pressures: A moderating of cost pressures was one of the report’s good observations from August. The rate of inflation for input prices decreased to its lowest level in five months, enabling businesses to expand their purchasing. The rapid inflation of output prices faced by manufacturers persisted, almost matching the 11-year peak reached in July, even with the slower increase in expenses. This indicates that, mainly as a result of consistently high demand, businesses were still charging more to their customers even if it was cheaper for them to create the items.

Although there was an obvious decrease in input costs, Bhandari clarified that the inflation of output prices slowed down considerably less sharply. Because of this, producers were able to raise their profit margins by charging customers for extra expenses.

Effect on the RBI’s Interest Rate Outlook and Employment: According to the poll, employment growth in the manufacturing sector has slowed for the past two months. In spite of this, businesses kept adding new employees for the sixth consecutive month, propelled by high demand and hope for the future of their businesses. Nonetheless, when several businesses lowered their headcounts at the middle of the second fiscal quarter, the labour market appeared to be tightening.

The main cause of India’s July inflation rate drop, which was nearly five years below the previous record of 3.54%, was a substantial base impact.  Due to the decline in inflation, economists forecast that the Reserve Bank of India (RBI) would cut interest rates by 25 basis points in the upcoming quarter. A rate reduction is anticipated to contribute to economic stimulation and partially overcome the manufacturing sector decline.

Prospects for the Manufacturing Industry in the Long Run: Considering the difficulties encountered in August, the Indian manufacturing sector has grown for 38 months running since July 2021. The industry is still growing, but there are underlying issues that need to be resolved, as seen by the PMI’s drop from the flash estimate of 57.9 to 57.5.

Softer demand, increased competition, and rapid price inflation all point to the reality that manufacturers will face challenging conditions in the months to come. But with the possibility of an RBI rate decrease as well as ongoing investments in efficiency and technology, the industry might be able to maintain growth even in more difficult economic times.

In summary, the development trajectory of the Indian manufacturing sector has slowed, but it is still growing. The months ahead will be critical as businesses adapt to shifting market conditions and authorities think through ways to encourage sustained economic growth.

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