August 2, 2024
New Delhi, India
Manufacturing PMI
India’s manufacturing sector experienced a slight dip in activity in July, as indicated by the latest HSBC final India Manufacturing Purchasing Managers Index (PMI). Despite the marginal slowdown, the sector continues to show robust performance with strong international sales and high employment levels.
Manufacturing PMI Overview:
- July PMI: 58.1
- June PMI: 58.3
- May PMI: 57.5
- April PMI: 58.8
The PMI, compiled by S&P Global and based on responses from around 400 manufacturers, reflects the sector’s overall health. A reading above 50 indicates expansion, while a reading below 50 signals contraction. The July figure of 58.1, though slightly lower than June’s 58.3, remains well above the long-term average and signifies continued growth.
Key Factors Influencing the July PMI:
- Softer Increases in New Orders and Output: The slight decline in PMI was due to softer increases in new orders and output compared to the previous month.
- International Sales Growth: Despite the overall slowdown, international sales grew significantly, driven by demand from various regions.
- Input Cost Inflation: Higher input costs and labor expenses were noted as key factors impacting the sector’s performance.
- High Employment Levels: The sector maintained high employment levels, reflecting favorable demand conditions.
PMI Reading Compared to Flash Projection: The July PMI reading of 58.1 was slightly lower than the flash projection of 58.5 released last month. However, the index has remained above the critical 50-point mark for nearly three years, indicating consistent expansion in the manufacturing sector.
Sector Performance Analysis: The manufacturing sector had shown a strong recovery in June after hitting a three-month low in May. The marginal slowdown in July suggests a need for manufacturers to manage cost pressures while capitalizing on the strong demand environment.
While India’s manufacturing activity saw a marginal slowdown in July, the sector continues to demonstrate resilience with robust international sales and high employment levels. Manufacturers will need to navigate input cost inflation and higher labor expenses to maintain growth momentum in the coming months.
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