India's Factory Activity Slows to Nearly 5-Year Low in July: HSBC PMI
India's manufacturing sector witnessed a slowdown in July, with factory activity expanding at its weakest pace in almost five years as softer domestic demand affected new orders, hiring, and purchasing activity, according to the latest HSBC India Manufacturing Purchasing Managers' Index (PMI).
The seasonally adjusted HSBC India Manufacturing PMI fell to 53.5 in July from 54.2 in June, marking the lowest reading since August 2021. Although the figure remained above the 50-point mark, which separates growth from contraction, it also fell below the survey's long-term average of 54.2, pointing to a moderation in overall activity.
According to the survey, manufacturers continued to record growth in new business, supported by promotional campaigns and steady underlying demand. However, the pace of expansion weakened considerably and registered its second-slowest increase in more than four years as subdued market conditions and reduced customer interest weighed on sales.
Manufacturing output continued to rise during the month, but production growth remained among the weakest levels recorded since mid-2022. Consumer goods manufacturers experienced a sharper slowdown, while companies involved in the production of intermediate and capital goods performed relatively better.
Exports, however, remained a strong area of growth. New export orders increased at a faster pace than in June, driven by stronger demand from countries such as Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the United Arab Emirates.
Companies also continued replenishing their inventories by increasing purchases of raw materials, although the pace of buying slowed to its lowest level in 31 months. Supply-chain efficiency improved considerably, with delivery times shortening at one of the fastest rates recorded by the survey. ALSO READ: Noel Tata Unveils Tata Trusts' Vision for Nation Building, Says 'Do What India Needs'
Inventory levels strengthened during the month. Stocks of purchased materials increased at a faster rate than in June, while inventories of finished products recorded their biggest rise in more than 11 years after declining in the previous month.
Employment continued to grow for the 29th consecutive month, but the pace of recruitment slowed further. Job creation weakened for the third month in a row and was the slowest recorded during the current expansion phase.
Inflationary pressures also eased during the month, with input costs rising at their slowest pace in five months despite higher transportation expenses. Manufacturers passed on some of these costs to consumers, although overall selling price inflation remained largely unchanged.
Despite the moderation in growth, manufacturers remained optimistic about the future. Businesses expect stronger consumer demand, higher infrastructure spending, increased client enquiries and marketing initiatives to support growth in the coming months. ALSO READ: India Climbs 25 Places in Global Market Reform Rankings, Reaches 57th Position
