New Delhi, August 1, 2024 – India’s manufacturing activity continued its robust expansion in July, driven by strong domestic and international demand, according to the latest survey by S&P Global. The HSBC final India Manufacturing Purchasing Managers’ Index (PMI) recorded a solid 58.1, maintaining a positive growth trajectory since July 2021, the longest in over a decade.
Despite a slight dip from June’s 58.3 and the preliminary estimate of 58.5, the PMI remains well above the 50-mark that separates growth from contraction. “India’s headline manufacturing PMI showed a marginal slowdown in the pace of expansion in July, but with most components remaining at robust levels, the small drop is no cause for concern,” said Pranjul Bhandari, Chief India Economist at HSBC.
The survey highlighted buoyant domestic demand, with steady growth in new orders and output. Export activity surged at the second-fastest pace in 13 years, fueled by strong international demand from Asia, Europe, North America, and the Middle East.
Optimism for the coming year remains high, as firms continue to hire, albeit at a slightly slower pace than in June. The positive momentum in job creation has been sustained since March, reflecting a healthy economic outlook.
However, cost pressures are intensifying. Input and output price sub-indexes showed marginal acceleration in cost inflation, with prices charged to clients rising at the fastest rate since October 2013. This could signal further inflationary pressures in the economy.
With inflation already above 5% in June, the Reserve Bank of India’s anticipated policy easing next quarter may be impacted, potentially keeping interest rates higher for longer.
