India’s manufacturing PMI strengthened to an 8-month high to 56.4 in July. It was recorded at 53.9 in June and 54.6 in May.
“Rising from 53.9 in June, to 56.4 in July, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) highlighted the strongest improvement in the health of the sector for eight months. Moreover, growth upgrades were seen in each of the three monitored market groups,” stated S&P Global India Manufacturing Purchasing Managers’ Index.
The report added that the upturn was broad-based by sub-sector and led by investment goods. Indian manufacturers saw marked growth in new business and output. Input purchasing, job creation remained marginal amid an uncertain outlook, it added.
The growth momentum that was lost in June recovered in July, with new order intakes rising substantially. The latest increase was the most pronounced since November. However, there was a slowdown in external sales, even though international markets contributed to the latest increase. New export orders were the weakest in four months.
Goods producers registered a softer increase in their expenses as demand for raw material remained robust, thereby increasing cost burdens. However, the rate of inflation slipped to an 11-month low. Chemicals, electronic components, metals, textiles, and transportation fees were reportedly up in July.
Inflation rates for both input and output charges were the most acute in the capital goods segment, while the weakest was noted in the intermediate goods sub-sector.
While the manufacturing industry showcased a solid performance, overall job creation remained subdued. There was a marginal increase in employment, and it remained in the same lines as seen in the current five-month sequence of growth. Most firms – 98 per cent – decided to leave staff strength unchanged.
Future uncertainty also constrained hiring activity, stated the report. While it improved from June’s 27-month low, the overall level of business sentiment was muted when it came to historical data. Most – 96 per cent – of manufacturers forecast no change in output from present levels in the next 12 months.
“The Indian manufacturing industry recorded a welcome combination of faster economic growth and softening inflation during July. Output expanded at the fastest pace since last November, a trend that was matched by the more forward-looking indicator new orders. Although the upturn in demand gained strength, there were clear signs that capacity pressures remained mild as backlogs rose only marginally and job creation remained subdued,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Also read: Manufacturing PMI weakens to 53.9 in June due to rising input costs, inflation concerns