The Manufacturing Purchasing Managers’ Index rose to 54.7 in April, from 54.0 in March.
Bangalore:
Factory activity in India rose last month, driven by a solid growth in demand as pandemic restrictions eased, but rising energy prices pushed input costs to a five-month high, a private survey showed.
International demand also hit a nine-month high after contraction in March and domestic demand was above average.
The Manufacturing Purchasing Managers’ Index, compiled by S&P Global, rose to 54.7 in April, from 54.0 in March.
It beat expectations of a Reuters poll for 53.8 and was above the 50-mark, marking the tenth consecutive month of growth separating contraction from growth.
“While factories continued to increase production at an upward trend pace, the ongoing increase in sales and input purchases suggests that growth will continue in the near term,” said Poliana de Lima, economics associate director at S&P Global.
That optimism was fueled by an easing of Covid-19 restrictions, but the recent spike in coronavirus cases and power outages could dent industrial activity in the coming months.
In fact, the level of business expectations remained weak compared to the previous trends. While some firms predicted better growth over the next 12 months, others indicated that the outlook was difficult to predict.
Firms hired more workers in April but the increase from March was modest.
Input costs rose at the fastest pace since November due to disruptions caused by the Russo-Ukraine war, higher transportation costs and commodity prices.
As in previous months, additional costs were shared by consumers and prices increased at the fastest rate in a year.
“A key insight from the latest results was the intensity of inflationary pressures, as volatility in energy prices, global shortages of inputs and the war in Ukraine drove up procurement costs,” De Lima said.
“This increase in price pressures could dampen demand as companies continue to share the additional cost burden with their customers.”
The Reserve Bank of India is now expected to raise its key interest rate in June and opt for a faster rate hike to check inflation.