India's Manufacturing PMI Slows To Near 5-yr Low In July
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that the suppliers’ delivery times index rose in July, encouraging that supply chain delays are continuing to unwind. “However, renewed tensions in the Middle East have raised fresh doubts about how durable these improvements will be,” the chief economist said
New Delhi: Amid the ongoing West Asia crisis, India's manufacturing sector expanded at its slowest pace in nearly five years in July as overall demand remained soft, while a third consecutive shift of slowing job creation also signalled a loss of momentum in the same month. July, however, witnessed that the growth cooled across metrics such as total sales, input purchasing and employment, a private survey showed on Monday.
As per the survey, the seasonally adjusted HSBC India manufacturing purchasing managers’ index, fell from 54.2 in June to 53.5 in July, the lowest ever since August 2021 and below the long-run series average of 54.2. In the purchasing managers' index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that the suppliers’ delivery times index rose in July, encouraging that supply chain delays are continuing to unwind. “However, renewed tensions in the Middle East have raised fresh doubts about how durable these improvements will be,” the chief economist said.
“On supply-chain conditions, manufacturers appear to be rebuilding buffers: inventories of both inputs and finished goods increased alongside a rise in purchasing volumes, suggesting firms are securing supply and limiting exposure to potential disruption,” he added.
However, the survey pointed out that during July, the rate of growth in new orders was the second weakest in over four years. “Panel members indicated that advertising and demand resilience supported sales, which were somewhat curbed by increasingly challenging market conditions and reduced client interest for key items,” the survey noted.
“The output and new export orders strengthened, pointing to resilient demand, particularly from overseas markets. Price pressures also shifted: input cost inflation moderated, but output charge inflation accelerated, indicating firms are once again passing through price increases to protect margins," Bhandari said.
On the employment front, the survey also said that job creation across India's manufacturing industry weakened for the third straight month in July. “The rate of increase in employment was the slowest in the current 29-month period of uninterrupted growth,” the survey said.
Meanwhile, the survey also said that cost pressures receded to their weakest in five months, though companies continued to report higher prices for transportation in particular. “Meanwhile, there was a moderate increase in selling prices that was broadly similar to June,” it added.
On international new orders, the survey also said that a welcome development was seen for new export orders, which increased at a faster rate. “Also, there was a mild recovery in business optimism. Besides, there was a marked and accelerated upturn in external orders. “Among many, firms noted gains from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the UAE,” it added.
