The manufacturing industries are driving a rebound in India’s private sector output in April, following a slump in March during the initial shock caused by the war in Iran, a survey showed on Thursday.
The HSBC Flash India Composite PMI Output Index rose to 58.3 in April from 57.0 in March, according to the flash survey of Indian manufacturers and service providers.
Total activity and new orders in the private sector are expanding in April, after a contraction in March due to the Middle East war. The manufacturing sector is leading the resurgence as output and sales rebound, although price pressures are intensifying, the preliminary flash survey for April found.
The higher costs are the result of rising fuel, gas, oil, and raw material prices, businesses reported in the flash survey.
“There were also mentions of gas shortages pushing up its price,” the PMI report said.
Amid a liquefied petroleum gas shortage as Middle Eastern supply crashed, the Indian government last month cut LPG supplies to commercial establishments and industries to have more cooking gas available for household use. Authorities are also pushing for an expansion of the city pipeline gas networks to replace LPG cylinders and use where possible.
The LPG supply crunch has eased in recent weeks, but the disrupted supply chains could take up to three to four years to recover, a government official said earlier this month.
“Private sector activity accelerated after easing in March amid disruptions linked to the Middle East conflict. Manufacturing led the upturn, with faster growth in output and new orders,” commented Pranjul Bhandari, Chief India Economist at HSBC.
“The survey indicated that firms are building buffer stocks to manage the uncertainties around the longevity of the supply-side shock,” the economist added.
However, input costs for manufacturing industries remain high and companies have already started to pass part of these costs on to consumers via increased selling prices, Bhandari noted.
By Tsvetana Paraskova for Oilprice.com
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