Mumbai: India’s manufacturing sector growth strengthened in July to a 16-month high of 59.1, supported by faster increases in new orders and output amid favourable demand conditions, a monthly survey said on Friday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index rose from 58.4 in June to 59.1 in July, signalling the strongest improvement in the health of the sector since March 2024.
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
“India recorded a 59.1 manufacturing PMI in July, up from 58.4 during the prior month. This marked a 16-month high for the Indian manufacturing sector, which benefited from strong growth in new orders and output,” Pranjul Bhandari, Chief India Economist at HSBC, said.
As per the survey, overall sales rose at the fastest pace in close to five years. Subsequently, production growth strengthened to a 15-month high in July and outpaced the series trend.
Indian manufacturers remained confident of a rise in output over the course of the coming 12 months, but the overall level of positive sentiment fell to its lowest mark in three years.
“… Business confidence fell to its lowest level in three years due to concerns over competition and inflation. Indeed, input and output prices in India’s manufacturing sector both remained elevated during July,” Bhandari said.
Companies continued to hire extra staff at the start of the second fiscal quarter, but they did so to the least extent in eight months.
Moreover, a vast majority of panellists (93 per cent) indicated that employment numbers were sufficient for current requirements. Indeed, outstanding business volumes increased only marginally in July.
“Amid softening business confidence, Indian manufacturers hired extra staff at the slowest rate since November 2024,” Bhandari said.
Among the main headwinds to growth, survey members listed competition and inflation concerns.
On the price front, the survey said cost pressures intensified in July. Amid reports of greater aluminium, leather, rubber and steel prices, average input costs rose at a faster pace than in June.
According to panel members, favourable demand conditions facilitated upward adjustments to their fees, the survey said.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
PTI
