India’s manufacturing sector hit a 10-month high in April 2025, despite the HSBC India Manufacturing Purchasing Managers’ Index (PMI) only rising slightly to 58.2 from 58.1 in March, according to data compiled by S&P Global on Friday.
The seasonally adjusted index signalled the strongest improvement in the sector’s health since June 2024, driven by faster growth in employment, production, and stocks of purchases.
This follows a dip to a 14-month low of 56.3 in February, when output, new orders, and input purchasing had slowed.
Outputut demand, export boom drive PMI
New orders, especially from overseas, rose sharply. International demand grew at the second-fastest rate in over 14 years, with businesses from Africa, Asia, Europe, West Asia, and the Americas placing more orders for Indian goods, the HSBC survey noted. Adding that factories increased production at the fastest pace since June 2024, with consumer goods leading this growth.
Commenting on PMI, Chief India Economist at HSBC Pranjul Bhandari, said, “The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements. Manufacturing output growth strengthened to a ten-month high on robust orders. Input prices increased slightly faster, but the impact on margins could be more than offset by the much faster rise in output prices, of which the index jumped to the highest level since October 2013.”
Manufacturers optimistic on future growth
About 9 per cent of surveyed manufacturers hired more workers, both permanent and temporary, to meet rising demand. Companies increased their buying activity and built up inventories to keep up with future demand.
The April data showed strong optimism about future output, driven by expectations of higher demand. Companies were also more confident due to better marketing, improved efficiency, and more new customer enquiries.
What is manufacturing PMI?
The manufacturing PMI is a key economic indicator that reflects business activity in the sector. It is based on survey responses from purchasing managers and covers areas such as production levels, new orders, employment, supplier performance, and inventory levels. Given its forward-looking nature, PMI data is closely monitored by investors, businesses, and policymakers to assess economic trends and momentum.
Industrial output recovers in March
Meanwhile, industrial output showed a modest recovery in March. The Index of Industrial Production (IIP) grew 3 per cent, up from February’s six-month low of 2.72 per cent. However, overall IIP growth for FY25 slowed to 4 per cent, the weakest in four years, compared to 5.9 per cent in FY24. The subdued performance highlights a broader deceleration across several industrial segments.
In March, the uptick in IIP was supported by growth in electricity output (6.3 per cent) and a mild recovery in manufacturing (3 per cent). However, mining sector growth remained weak at just 0.4 per cent. For context, IIP had risen by 5.4 per cent in March 2024 and had contracted by 8.4 per cent during the pandemic-hit FY21.
Reserve Bank open to rate cuts
Meanwhile, the Reserve Bank of India’s Monetary Policy Committee (MPC) cut the repo rate by 25 basis points to 6 per cent in April, while shifting its stance from “neutral” to “accommodative,” signalling potential further easing. This marked the second rate cut in 2025, following a similar reduction in February to 6.25 per cent from 6.5 per cent.
The next MPC meeting is scheduled for June 4-6, 2025.
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