Strong Domestic Demand Keeps India’s Manufacturing PMI At 53.5 In July

Activity in India’s manufacturing sector remained robust in July. According to the HSBC India Manufacturing PMI survey, the PMI stood at 53.5 in July. However, the pace of growth moderated, resulting in a figure lower than June’s 54.2. This data, compiled by S&P Global, was released on Monday.

Strong Demand

A PMI reading above 50 indicates growth. The survey noted that Indian manufacturers continue to benefit from strong demand, with new orders driving output growth. However, growth slowed across certain metrics such as total sales, input purchasing, and employment.

Sharp Rise in Export Orders: A Positive Sign

A positive highlight was the sharp increase in new export orders. Business optimism also saw a slight recovery. Operating expenses rose—particularly transportation costs—but the overall rate of cost inflation eased to a five-month low. Consequently, there was only a marginal increase in output charges.

Analysis by HSBC Economist

Pranjul Bhandari, Chief India Economist at HSBC, stated, “The supplier delivery times index rose in July, a positive sign indicating that supply chain delays are easing. However, renewed tensions in the Middle East have raised fresh doubts about the sustainability of these improvements. In response, manufacturers are rebuilding buffers. This has led to increased purchasing volumes and a rise in inventories of both inputs and finished goods, suggesting that companies are securing supplies and mitigating the risk of potential disruptions.”

She further noted that output and new export orders strengthened, signalling robust demand, particularly from foreign markets. Price dynamics also shifted in July; while input cost inflation eased, output price inflation accelerated. This indicates that companies are once again passing on price increases to customers to protect their margins. Countries from which export orders increased

According to the survey, Indian manufacturing companies have seen an increase in export orders from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and the UAE.