New domestic and foreign orders boost production; Price rise marginal

A reading above 50 indicates expansion in activities and a reading below 50 indicates contraction. “A solid and accelerated increase in new orders led firms to raise production accordingly. Moreover, growth of both domestic and foreign demand was reported, with new business from abroad rising at the quickest rate since February. On the price front, a marginal rise in costs was registered, whereas average selling prices were unchanged over the month,” it said.

While this is a generally positive set of data, the survey stated that the upcoming PMI data releases would indicate whether the manufacturing sector could sustain this momentum going forward.

The PMI survey covers 300 companies and the index takes into account output, new orders, employment, stocks of items purchased and suppliers delivery times.

The survey said, there was an evidence of building pressures on the capacity of Indian manufacturers operations, as outstanding business was accumulated for the second consecutive month and at the quickest pace since March.

“Growth in manufacturing rebounded in July, with the PMI rising since prior month. This reflects stronger increases of new orders and output. The sector was also boosted by the quickest expansion in export orders since February,” said Pollyanna De Lima, economist at Markit.