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The India's manufacturing activity made a strong start to the fiscal year 2022/23, according to a survey. Bolstered by a solid increase in demand as pandemic restrictions were eased, the Manufacturing Purchasing Managers' Index compiled by S&P Global, improved to 54.7 in April from 54.0 in March. This was the 10th consecutive month the reading was above 50-mark, which separates growth from contraction. The number came in better than analyst expectations. 

Analysts polled by Reuters expected the number at 53.8. 

However, the survey suggested intensifying of inflationary pressures, owing to rising commodity prices, the Russia-Ukraine war and greater transportation costs. Input prices increased at the fastest pace in five months, while output charge inflation hit a 12-month high, according to the survey. 

“A major insight from the latest results was an intensification of inflationary pressures, as energy price volatility, global shortages of inputs and the war in Ukraine pushed up purchasing costs. Companies responded to this by hiking their fees to the greatest extent in one year. This escalation of price pressures could dampen demand as firms continue to share additional cost burdens with their clients," said Pollyanna De Lima, Economics Associate Director at S&P Global.

International sales grew solidly, following a contraction in March. April data showed a rebound in new export orders, following the first contraction for nine months in March. The rate of increase was solid and the strongest since last July.

The retreat of COVID-19 restrictions continued to support demand, according to survey participants. The rate of new order growth was marked, above trend and faster than that seen in March.

“The Indian manufacturing PMI remained well inside positive territory during April, recovering some of the ground lost in March. Factories continued to scale up production at an above-trend pace, with the ongoing increases in sales and input purchasing suggesting that growth will be sustained in the near-term. Yet, the survey continued to show a lack of pressure on firms' operating capacities alongside only mild job creation. Moreover, expectations regarding growth prospects remained subdued," the S&P Global economist said. 

The survey also showed that there was some improvement in business confidence at the start of fiscal year 2022/23. However, the overall degree of optimism remained subdued by historical standards. “Some firms foresee further improvements in demand and economic conditions, while others noted that the year-ahead outlook was difficult to predict," the survey said. 

 

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