Manufacturing activity remains sluggish as input costs hit 44 month high

India’s manufacturing sector showed signs of mild recovery in April but remained under pressure from weak demand and surging input costs, according to the latest survey by S&P Global.The Purchasing Managers’ Index (PMI) for manufacturing rose to 54.7 in April from 53.9 in March a four-year low but the improvement did little to mask the underlying slowdown. The latest reading marked the second-weakest performance since 2022, indicating that while the sector continues to expand, the pace remains subdued.A PMI reading above 50 signals expansion, but key components such as new orders and output recorded their second weakest growth in three-and-a-half years, reflecting muted demand conditions both domestically and globally.
Input Cost Pressures Intensify
A major drag on the sector has been the sharp rise in input costs, largely attributed to disruptions stemming from the West Asia conflict. Input prices surged at the fastest pace in 44 months, driven by higher costs of aluminium, chemicals, fuel, electrical components, leather, petroleum products, and rubber.Manufacturers partially passed on these cost pressures to consumers, resulting in the steepest increase in output prices in six months. Overall inflation within the manufacturing sector climbed to its highest level since August 2022.“Spillovers from the West Asia conflict are becoming more evident, particularly through inflation: input costs increased at the fastest pace since August 2022, and output prices rose at the quickest rate in six months,” said Pranjul Bhandari.
Exports Provide a Silver Lining
Despite domestic headwinds, export demand emerged as a bright spot. New export orders expanded at the fastest pace in seven months, supported by improved demand from markets such as Australia, France, Japan, Kenya, China, Saudi Arabia, the UAE, and the UK.The growth in exports helped sustain overall output levels, even as domestic demand remained relatively soft.
Encouragingly, manufacturers continued to expand their workforce, with job creation rising at the fastest pace in 10 months. Hiring activity reflected ongoing expansion plans and improved business confidence.According to S&P Global, overall sentiment among manufacturers remained upbeat, reaching its second-highest level since November 2024. Companies expressed optimism that stronger marketing efforts and the approval of pending projects would support future growth.While rising costs and global uncertainties continue to weigh on the sector, the April data suggests that India’s manufacturing industry retains a degree of resilience, supported by export momentum and steady employment growth.

(Business Correspondent)