Bengaluru (Reuters). Factory activity in India picked-up last month. The strong rise in demand for pandemic controls was accompanied by an increase in production. But, input costs soared to a five-month-high due to rising energy prices, according a private survey.

After March’s contraction, international demand rose to an all-time high of 9 months. Domestic demand was also strong.

The Manufacturing Purchasing Managers’ Index compiled by S&P Global (NYSE:), improved to 54.7 in April from 54.0 in March.

The Reuters poll expected 53.8, and it was also above the 50 mark, which distinguishes growth from decline, for the tenth consecutive month.

“Factories continued to scale up production at an above-trend pace, with the ongoing increases in sales and input purchasing suggesting that growth will be sustained in the near-term,” noted Pollyanna De Lima, economics associate director at S&P Global.

This optimism was supported by COVID-19’s easing, however, a recent rise in coronavirus infections and an electric shortage may have an impact on industrial activity over the next few months.

The level of expectations for business growth was actually lower than in past years. Some firms forecasted better growth over the next twelve months. Others indicated that it was hard to predict the future.

Although firms hired more employees in April, the increase was only marginal compared to March.

Since November, input costs have risen at an alarming rate. This was exacerbated by increased transportation costs and higher commodity prices due to disruptions resulting from the Russia-Ukraine conflict.

Consumers shared the additional cost as they did in past months, and charges rose at their fastest pace for a whole year.

De Lima added that the most important insight was the intensification in inflationary pressures as global energy shortages, volatility and war in Ukraine drove up buying costs.

The escalation price pressures might dampen the demand because firms will continue to bear additional costs with their clients.

Now, the Reserve Bank of India will likely raise its key rate to bring down inflation. [RBI/INT]