The latest S&P Global survey reveals that Indian manufacturing sector retained its strong growth momentum in July, although there was a marginal decline in activity compared to the previous month. The country’s purchasing managers’ index (PMI) for manufacturing registered 57.7 in July, down slightly from 57.8 in June and 58.7 in May. However, the figure remains well above the expansion threshold of 50.
Despite easing in recent months, higher inflationary pressures continue to pose a significant challenge for the manufacturing sector. However, the survey highlights a sharp uptick in new export orders, driving the growth engine and contributing to the sector’s resilience.
Andrew Harker, economics director at S&P Global Market Intelligence, noted that the Indian manufacturing sector displayed no signs of losing growth momentum in July. Production lines continued to operate at full speed, propelled by robust new order growth. As demand remains strong, firms are expanding employment solidly, and this trend is expected to continue in the coming months.
The manufacturing sector’s stellar performance is notable, especially amidst the demand weakness observed in other parts of the world. While the domestic market sustains its strong momentum, the growth in new export business surged to its highest level since November 2022.
The report revealed that manufacturers responded to the surge in new orders by expanding production, maintaining a consistent monthly increase since July 2021. However, the solid pace of job creation was not sufficient to prevent a further accumulation of backlogs of work, given the strength of the rise in new orders.
S&P Global panellists cited higher costs for cotton and other raw materials as a contributing factor to inflationary pressures. Despite this challenge, the Indian manufacturing sector remains resilient and continues to outperform global counterparts.
In summary, the Indian manufacturing sector’s growth remains robust, supported by a surge in new export orders and a resilient domestic market. While inflationary pressures persist, the sector’s expansion and job creation reflect its strong potential for continued growth in the future