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India's factory activity expanded at its quickest pace in four months in April, driven by solid growth in new orders and output, a private survey showed on Monday, signaling resilient demand and an encouraging outlook.

The survey results suggest India will continue to be one of the fastest-growing major economies despite slowing global growth that has undermined momentum across several other countries. [ECILT/WRAP]

The Manufacturing Purchasing Managers' Index compiled by S&P Global increased to 57.2 last month from March's 56.4, remaining above the 50-mark separating growth from contraction for a 22nd month and confounding expectations in a Reuters poll for a fall to 55.8.

"Reflecting a robust and quicker expansion in new orders, production growth took another step forward in April. Companies also benefited from relatively mild price pressures, better international sales and improving supply-chain conditions," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said in a release accompanying the survey.

"It seems like Indian manufacturers have abundant opportunities to keep powering ahead. Besides seeing the strongest inflow of new work in 2023 so far, capacities were expanded through job creation, input buying was lifted."

Both new orders and output grew at their fastest pace since December, and that helped firms resume hiring during April, following the first decline in 13 months in March.

Foreign demand also expanded at the fastest pace in four months in April and optimism improved.

"Manufacturers are certainly upbeat towards growth prospects, with optimism improving from March's eight-month low on the back of contracts pending approval, rising client enquiries, marketing initiatives and evidence of demand resilience," De Lima said.

The survey showed input costs rose at a faster pace in April, although improving demand meant firms were able to pass on some of that burden to customers, suggesting retail inflation is unlikely to slow significantly anytime soon.

Inflation was expected to average 5.3% this fiscal year and 5.0% next, remaining well above the Reserve Bank of India's 4.0% medium-term target, a separate Reuters poll found.