India's Private Sector Activity Hits Eight-Month High in April as Export Orders Surge

India's private sector activity accelerated in April, reaching its strongest pace in eight months despite disruptions from the Middle East war that had choked crude oil and gas supplies. A flash survey by HSBC Holdings Plc, as reported by Bloomberg, showed the HSBC Flash India Composite Output Index rising to 58.3 from 57.0 in March, signaling a sharp expansion in both manufacturing and services.

This rebound marks a significant turnaround from March, when economic growth had slowed to its weakest since late 2022 amid the conflict's fallout. Manufacturing PMI climbed from 53.9 to 55.9, while services activity also picked up, with companies reporting quicker expansions in output and new orders. According to S&P Global's data cited in the HSBC flash report, the uptick reflected improved overall business conditions at the start of India's fiscal year.

The Middle East war had posed immediate challenges, driving up input costs to near four-year highs and contributing to a manufacturing PMI drop to 53.8 in March—the lowest in 4.5 years—as factories cut output due to supply strains and weaker domestic demand. Reports from Business Standard and ICIS highlighted how inflationary pressures and market instability from the conflict weighed on activity, with services growth also moderating that month.

Yet April's data points to resilience, fueled partly by a surge in new export orders—the fastest since 2014 in some accounts—spanning regions like Africa, Asia, Europe, the Middle East, and the Americas. Economists at HSBC, including chief India economist Pranjul Bhandari as noted in Economic Times coverage, attributed this to international demand and a temporary 90-day pause in U.S. tariff implementations, even as a baseline 10% tariff lingered. Job creation spread across sectors, with both full- and part-time hiring reported.

This contrast with global trends underscores India's economic durability. While Japan's manufacturers frontloaded production to record 12-year highs amid similar war concerns, as per Bloomberg, India's private sector not only recovered but expanded output and employment. The war's inflationary ripple effects stalled growth momentum worldwide, with S&P Global flash PMIs signaling broader caution.

Looking ahead, sustained export gains and easing supply shocks could bolster India's growth trajectory into the fiscal year. However, persistent oil price volatility from the conflict remains a risk, potentially reigniting cost pressures if geopolitical tensions escalate. Private sector firms' optimism, evident in stronger order books, suggests confidence in navigating these headwinds.