Indian factory activity has expanded for 18 months in a row

SYDNEY, AUSTRALIA – MARCH 26: Virat Kohli of India celebrates after taking a catch to dismiss David Warner of Australia off the bowling of Umesh Yadav of India during the 2015 Cricket World Cup Semi Final match between Australia and India at Sydney Cricket Ground on March 26, 2015 in Sydney, Australia. (Photo by Ryan Pierse/Getty Images)

India’s manufacturing sector continued to grow in April with the HSBC manufacturing PMI gauge coming in at 51.3.

While down on the 52.1 level of March, it was the 18th consecutive month that activity among Indian factories has expanded.

As was the case with the headline figure new order growth continued to expand, albeit at a slower pace than what was seen in March, with an unchanged reading for new export orders helping to partially offset a slowdown in total order growth. Interestingly, companies reported greater “greater inflows of new business from key export clients, but in particular from those operating in Asia”.

Elsewhere firms reported that jobs were lost rather than created – something that has only occurred twice in the past 12 months – while order backlogs were largely unchanged.

In a sign that inflationary pressures remain contained, input prices rose fractionally and at a slower pace than seen in March.

Markit’s Pollyanna De Lima said:

Despite recording softer rates of expansion, the Indian manufacturing sector held its ground in April, benefiting from ongoing improvements in operating conditions. A highlight of the latest survey was the strong external market, with the rise in new export business remaining solid. However, we are yet to see growth lead to meaningful job creation, as the index measuring employment has shown little change to staff numbers since the beginning of 2014.

On the price front, tariffs fell for the first time since May 2013, as firms responded to weaker cost inflation. Even with the slower pace of expansion, the goods-producing sector is on course to provide a boost to the overall economy in the upcoming quarter.

Although factory activity expanded at a slightly slower pace than seen in March the reading – on balance – is far more optimistic than that for China which recorded a contraction in factory activity in April.

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