India: Private sector PMI decreases in April, but remains upbeat nonetheless
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit fell to 55.4 in April from 56.0 in March. Nevertheless, the PMI remained well above the 50-threshold, indicating an increase in business activity from the previous month.
The services PMI inched down from 54.6 in March to 54.0 in April as output expanded at the softest pace in three months. Meanwhile, new orders increased for the seventh month running, and the pace matched the previous month’s expansion, despite the recent outbreak in new Covid-19 cases weighing on demand somewhat. On the price front, input prices rose at the fastest rate in nearly a decade, but output prices were only marginally higher as competitive pressures dissuaded firms from raising prices.
On the manufacturing side, the PMI ticked up to 55.5 in April from 55.4 in March. The ongoing recovery in demand kept new orders and production expanding at a still-healthy—albeit softer—pace in April relative to March. Moreover, although employment levels fell for the 13th consecutive month in April as Covid-19 restrictions continued to hamper operating conditions, the pace of decline eased notably. On the price front, input prices rose at the quickest pace in nearly seven years, likely tied to supply constraints and higher demand for raw materials.
Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:
“One area of concern was inflation. Services firms noted the steepest rise in overall expenses in over nine years as global shortages of inputs and higher transportation costs continued to exert upward pressure on outlays. Companies absorbed most of the additional cost burden themselves, as indicated by only a slight increase in selling prices. The gap between rates of inflation for input prices and charges was one of the widest since the global financial crisis.”