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Mint
07-07-2025
- Business
- Mint
India shines while Asian manufacturing falters amid tariff turmoil
New Delhi: Manufacturing activity across most of Asia's export-driven economies faltered or saw only marginal improvement in June, as global trade tensions—exacerbated by a fresh wave of US tariffs—continued to weigh on sentiment. In this gloomy landscape, India stood out as a rare bright spot. Every major Asian economy that ran a trade surplus with the US last year saw factory output either contract or eke out a tepid rebound last month. That includes China, Vietnam, South Korea, Japan, and Malaysia—economies heavily reliant on American demand. The tariff freeze announced by President Donald Trump on 2 April is set to lapse on 9 July, casting further uncertainty over Asia's near-term export outlook. China's manufacturing sector, the region's bellwether, offered a glimmer of hope as the Caixin General Manufacturing Purchasing Managers' Index (PMI) rose to 50.4 in June from 48.3 in May—its highest reading since March and a return to expansionary territory. Still, the recovery remains fragile: over the past year, factory activity in China has swung between weak growth and contraction. Vietnam's PMI fell for a third straight month to 48.9 in June, while South Korea and Malaysia both reported sub-50 readings despite slight upticks, indicating continued contraction. Japan's data also showed lacklustre activity. In stark contrast, India's manufacturing sector continued to gather steam. The HSBC India Manufacturing PMI, compiled by S&P Global, rose to 58.4 in June, up from 57.6 in May, marking a 14-month high. This strength was underpinned by solid growth in output, new orders, and employment—even as the global trade backdrop remains shaky. India's performance stands out not just in momentum but in context. While China, Vietnam, South Korea, Japan, and Malaysia posted trade surpluses of $295.4 billion, $123.5 billion, $66 billion, $68.5 billion, and $24.8 billion respectively with the US in calendar year 2024, India's surplus was far smaller at $45.7 billion, according to US Trade Representative data. That makes India relatively less exposed to the tariff blowback and explains some of its resilience. 'The tariff war seems to have become a protracted affair, engendering structural changes in its wake as optimism of post-Cold War multilateralism finally dies down,' SBI Capital Markets said in its June Ecocapsule report. 'India seems attractively positioned, with fiscal and monetary policy playing a critical role in navigating these generational changes,' the report added. Yet the picture isn't uniformly bright. India's industrial production growth slipped to 1.2% in May, the slowest in nine months, as manufacturing momentum weakened and mining and electricity output contracted. That's a sharp contrast from the 6.3% expansion recorded in May 2023. While April's figure was revised upward to 2.6%, it still underlines ongoing strain in core sectors. Meanwhile, Moody's Ratings last week downgraded its outlook on sovereign creditworthiness in Asia-Pacific to negative, citing escalating trade policy uncertainty. The agency noted that export-heavy economies in the region—including China, Taiwan, South Korea, Thailand, Malaysia, and Vietnam—face rising cyclical and structural credit risks due to the tariff shock. 'Many export-reliant APAC economies were hit with very high US tariffs in April,' Moody's said. 'Policy uncertainty is challenging investment decisions and disrupting trade. We now expect the tariff shock to lead to lower economic growth in 2025 and 2026 than previously forecast.' To be sure, sector outlooks are distinct from rating outlooks, which, in addition to sector dynamics, also reflect issuers' specific characteristics and actions.
The Hindu
06-05-2025
- Business
- The Hindu
India's services sector growth improves slightly in April on new order inflows
India's service sector activity grew marginally in April as compared to the previous month, according to a survey of private sector companies. The improved activity was driven by a surge in new orders, notably from the U.S., and an easing of cost pressures. The HSBC India Services PMI Business Activity Index, calculated based on a single question of how the level of business activity compares with the situation the month before, came in at 58.7 in April, up from 58.5 in March. This, HSBC India said in its report, continued to remain higher than India's long-term average of 54.2. 'The overall expansion in output was fuelled by a significant rise in new business intakes, the joint-best in eight months, with many firms noting favourable demand conditions and successful marketing efforts,' the report said. 'In some instances, efficiency gains reportedly enabled companies to take on more work.' Orders placed with Indian companies originated in Asia, Europe, the Middle East and with the US 'particularly cited as sources of strength'. 'New export orders gained momentum after taking a breather in March, accelerating at its fastest pace since July 2024,' Pranjul Bhandari, Chief India Economist at HSBC said in the report. 'Margins improved as cost pressures eased and prices charged rose at a faster pace.' Notably, the strong export demand for Indian services comes on the back of a similar trend for India's manufacturing sector in April. According to HSBC's India Manufacturing PMI, released on May 2, new business from abroad in April for the manufacturing sector grew at its second-fastest rate in over 14 years. However, Ms Bhandari added that, while Indian services firms remained optimistic about future growth, their confidence 'waned slightly'.
Mint
06-05-2025
- Business
- Mint
India's services sector picks up pace in April
New Delhi: India's services sector rebounded in April after a March slowdown, driven by increases in new business and output, a private survey showed on Tuesday. The seasonally adjusted HSBC India Services PMI rose to 58.7 in April from 58.5 in March, staying well above the 50-mark that signals expansion, though still below February's 59. The index stood at 56.5 in January, 59.3 in December, 58.4 in November, 58.5 in October, and 57.7 in September. Business activity in India's services sector picked up slightly in April after a March slowdown, driven by a faster rise in new orders and a corresponding uptick in employment, the survey said. Capacity pressures grew with a solid rise in unfinished work, while average charges increased at a faster pace despite cost pressures easing to a six-month low, it added. "India services activity rose at a faster pace than last month. New export orders gained momentum after taking a breather in March, accelerating at its fastest pace since July 2024," said Pranjul Bhandari, chief India economist at HSBC. "Margins improved as cost pressures eased and prices charged rose at a faster pace. Though firms remained optimistic about future growth, their confidence waned slightly," she added. India's services sector—a pillar of its economy—accounts for more than half of its gross domestic product (GDP). India's economy grew 8.2% in 2023–24, driven by a strong 7.8% expansion in the January–March quarter, surpassing the RBI's 7% forecast. However, growth lost steam in 2024–25, easing to 6.7% in the first quarter and further slowing to 5.4% in the second—its weakest pace in nearly two years—amid sluggish manufacturing, muted urban consumption, and weak corporate earnings. India's growth momentum picked up in the December quarter (Q3FY25) after a slowdown in Q2, with GDP rising 6.2%—the slowest pace since Q4FY23, excluding the previous quarter's revised 5.6%. The Reserve Bank of India (RBI) forecasts 6.5% growth for FY26, supported by rural demand, public investment, and robust services exports. India's manufacturing sector grew at its fastest pace in 10 months in April, fueled by strong demand and rising output. The HSBC India Manufacturing PMI, compiled by S&P Global, rose to 58.2 in April from 58.1 in March and 56.3 in February. A reading above 50 signals expansion. The HSBC India Composite Output Index rose to 59.7 in April, up from 59.5 in March and 58.8 in February—the fastest expansion since August 2024. "New business volumes across the private sector rose at the fastest pace in eight months, helped by a pickup in growth across the service economy. The upturn at goods producers was broadly similar to March," the survey said. "Both manufacturing firms and their services counterparts registered faster expansions in new export orders. At the composite level, the rate of growth was at a nine-month high," it added. First Published: 6 May 2025, 11:22 AM IST
