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India's manufacturing PMI improves slightly; reaches 55.5 in April

Data released by analytics firm IHS Markit showed purchasing managers' index (PMI) for April marginally rose to 55.5 after declining to a seven month low in March at 55.4

twitter-logoReuters | May 3, 2021 | Updated 11:49 IST
India's manufacturing PMI improves slightly; reaches 55.5 in April

India's manufacturing activity improved a tad in April despite fresh domestic factory orders and output easing to eight month lows due to an intensification of the coronavirus pandemic that was nullified by new export orders rising at fastest rate since October last year. Data released by analytics firm IHS Markit showed purchasing managers' index (PMI) for April marginally rose to 55.5 after declining to a seven month low in March at 55.4. A figure above 50 indicates expansion, while sub-50 signals contraction.

New export orders increased for the eighth consecutive month in April. "The rise was associated with a pick-up in international demand for Indian goods, with all three monitored sub-sectors registering expansion," IHS Markit said.

This is in line with the trade data released by the commerce ministry on Sunday which showed merchandise exports remained robust in April despite localized lockdowns across the country, showing signs of increasing external demand for Indian goods. Exports grew at a record 197% to $30.21 billion in April due to a low base of last year when India entered a nationwide lockdown that disrupted supply chains, impacting both imports and exports.

Pollyanna De Lima, economics associate director at IHS Markit said the downturn in employment eased in April and business confidence towards the one-year outlook strengthened.

"The headwinds facing manufacturers cannot be ignored, however. The surge in covid-19 cases could dampen demand further when firms' financials are already susceptible to the hurdle of rising global prices. April saw the steepest increase in input costs for nearly seven years drive the sharpest upturn in output charges since October 2013. Data for the coming months will be important at verifying whether client demand is resilient to these challenges or if producers will have to further absorb cost burdens themselves to secure new work," she added.

Also read: Centre, state govts should consider lockdowns, ban super spreader events: SC

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