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www.projectstoday.comMay 2025Economic Review 7output rising at the fastest rate since June 2024. A strong and sustained expansion in new orders primarily drove this acceleration. Notably, international demand also played a significant role, marking the second-fastest growth in overseas sales since March 2011.Considerable increases in employment and procurement activities accompanied this favourable development. Also, the selling prices recorded the steepest hike since October 2013.The HSBC India Manufacturing Purchasing Managers%u2019 Index (PMI), adjusted for seasonal variations, edged slightly higher from 58.1 in March to 58.2 in April. Though the numerical increase was marginal, the index reflected the sharpest improvement in the sector%u2019s health over the past ten months. This upturn was supported by quicker expansions in input stocks, staffing, and production levels. Particularly, consumer goods manufacturers led the growth across subsectors.A major contributor to the improved output levels was the significant growth in new business, which remained nearly unchanged from March but represented the secondfastest rate in the last nine months. Survey respondents linked this growth to stronger demand both domestically and internationally.In terms of cost pressures, input prices increased at the highest pace seen in the past four months, driven by higher expenses related to building maintenance, labour, leather, paper, rubber, steel, and transportation. However, the rate of cost inflation remained moderate, lagging behind the rise in selling prices. The surge in new orders also resulted in an increase in backlogs of work, which, while modest, reached a 15-month high.To meet rising production needs, manufacturers continued to recruit more workers in April. Nine percent of survey respondents reported hiring additional staff, with a mix of permanent and temporary roles being filled. The scale of job creation was notable when viewed in historical context.Purchasing activity also showed a significant increase, aligning with the expansion in new business. This sharp growth in procurement was partially aimed at building inventories. Indeed, input inventories recorded their highest growth since August 2024. On the other hand, inventories of finished goods declined at the fastest pace in nearly three and a half years.Services IndexFollowing a temporary slowdown in March 2025, India%u2019s service sector saw a slight rebound in growth during April 2025. This renewed momentum was primarily driven by a stronger rise in new orders. However, increasing backlogs pointed to continued capacity constraints.The seasonally adjusted HSBC India Services PMI rose to 58.7 in April from 58.5 in March, signalling a strong pace of business activity expansion, well above the historical average of 54.2.The output surge was fueled by a notable rise in new business, among the highest in eight months, supported by favourable demand and effective marketing. Improved efficiency allowed firms to handle increased workloads, with the Finance & Insurance sector again leading in growth of both output and new orders.International demand also contributed significantly, with Asia, Europe, the Middle East, and the USA driving the fastest increase in export orders since July 2024.April marked the 35th consecutive month of employment growth in the service sector, with hiring accelerating compared to March. Businesses added both full-time and part-time staff to meet rising demand. Yet, the volume of unfinished work continued to grow, with the backlog rising more quickly than average.Composite IndexThe HSBC India Composite PMI Output Index increased slightly from 59.5 in March 2025 to 59.7 in April 2025. Both manufacturers and service providers reported faster growth. New business across the private sector rose at the quickest rate in eight months, mainly due to stronger growth in the service sector. Growth in manufacturing remained steady compared to March. Export orders also increased more quickly for both sectors, with overall growth reaching a nine-month high.However, there was a contrast in business sentiment. While the manufacturers were more optimistic, service providers sounded somewhat less confident.