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Factory activity gains pace in April amid high inflation

April data showed a rebound in new export orders, following the first contraction for nine months in March. The rate of increase was solid and the strongest since last July.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) rose from 54.0 in March to 54.7 in April, as production was stepped up to meet a rise in demand, after Covid-19 curbs were removed.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) rose from 54.0 in March to 54.7 in April, as production was stepped up to meet a rise in demand, after Covid-19 curbs were removed.

The manufacturing sector witnessed faster growth in April amid quicker increases in production as well as new orders. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose from 54.0 in March to 54.7 in April, as production was stepped up to meet a rise in demand, after Covid-19 curbs were removed.

Inflationary pressures meanwhile intensified, owing to rising commodity prices, the Russia-Ukraine war and greater transportation costs. Input prices increased at the fastest pace in five months, while output charge inflation hit a 12-month high.

While manufacturing PMI was in the expansion zone for 10 straight months to April, expansion in March was slower than in February. The eight infrastructure sectors registered a strong sequential growth of 14.4% in March. Growth gathered pace in intermediate and capital goods segments, indicating a rise in capacity utilisation.

The services index had scaled a three-month high in March.

In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“The Indian manufacturing PMI remained well inside positive territory during April, recovering some of the ground lost in March. Factories continued to scale up production at an above-trend pace, with the ongoing increases in sales and input purchasing, suggesting that growth will be sustained in the near term,” said Pollyanna De Lima, Economics Associate Director at S&P Global.

April data showed a rebound in new export orders, following the first contraction for nine months in March. The rate of increase was solid and the strongest since last July.

“A major insight from the latest results was an intensification of inflationary pressures, as energy price volatility, global shortages of inputs and the war in Ukraine pushed up purchasing costs. Companies responded to this by hiking their fees to the greatest extent in one year,” Lima said.

(with PTI inputs)

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