The ongoing tariff-related uncertainties seem to have dented the global manufacturing activity, as captured in respective Purchasing Managers' Index surveys, but it has had the opposite effect on India.
While factory activity across major economies, such as China, the US and the UK declined or remained subdued, India’s manufacturing performance surged to a 10-month high of 58.2 in April compared with 58.1 in the previous month.
"The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements,” said Pranjul Bhandari, chief India economist at HSBC.
Goods export witnessed the second fastest upturn in 14 years in April, according to PMI data released on May 2.
China's PMI Data
China was the worst-affected, as data released on May 1 showed that factory activity contracted at the fastest pace in 16 months. The NBS Purchasing Managers’ Index fell to 49 in April.
The value of 50 separates expansion from contraction on the PMI gauge.
Another index for manufacturing, compiled by Caixin, a Chinese business media group, in conjunction with S&P Global showed manufacturing activity slowdown to 50.4 compared with 51.2 in the previous month.
“The US tariff hikes took a toll on external demand, with new export orders declining at the fastest rate since July 2023, leading to just a marginal increase in total new orders in April,” said Wang Zhe, senior economist, Caixin Insight Group.
EU and UK PMI Reading
Although PMI picked up in Euro Area, recently released preliminary data showed that factory activity remained in contraction mode at 48.7, with the last expansion seen in August 2022.
The UK exhibited similar results to Euro Area.
“The start of the second quarter saw UK manufacturing buffeted by adverse global market conditions, rising cost pressures, deteriorating supply chains and increased trade uncertainty,” said Rob Dobson, Director, S&P Global Market Intelligence.
US PMI Indicators
Across the Atlantic, the US did not have smooth sailing either. The American economy contracted for the first time in three years in the first quarter of 2025, and the results from April do not look much encouraging either.
“Factory output fell for a second successive month as tariffs were widely blamed on a slump in export orders and curbed spending among customers more broadly amid rising uncertainty,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
US PMI remained unchanged at 50.2 ISM Manufacturing index, another measure of manufacturing activity, was lower at 48.7 percent in April compared with 49 percent in the previous month.
PMI Reading Across Asia
Indonesia, Thailand, Malaysia and South Korea all recorded production declines in April, as per PMI data released over the last two days.
Global Business Confidence
Future outlook in India seems to be going the other way, and there was strong optimism among manufacturers regarding output prospects, over the coming year.
In China, business optimism slipped to its third lowest level on record, while confidence in manufacturing dropped to its lowest level in 10 months in the US.
Business confidence in the UK was at a 29-month low in April.
IMF recently cut India’s growth forecast to 6.2 percent from 6.5 percent for FY26, while World Bank now projects Indian economy to grow 6.3 percent compared with 6.5 percent earlier.
An earlier analysis by Moneycontrol had found that the impact of tariff war on the US and world would be somewhat similar to the global financial crises in 2008, at least as far as IMF projections are concerned. The global economy also finds itself in a similar situation as global growth is expected to slump by 0.5 percentage points compared with the previous projection.
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