Manufacturing PMI: Output growth eased to three-month low in July

Demand remained strong and export orders grew at fastest pace in eight months

August 01, 2023 11:29 am | Updated September 01, 2023 01:51 pm IST - NEW DELHI

Image used for representational purpose only. File

Image used for representational purpose only. File | Photo Credit: The Hindu

 The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) eased slightly to 57.7 in July from 57.8 in June, with output levels continuing to expand but at the softest pace in three months.   

A reading of over 50 on the index reflects growth in activity levels and July marked the 25th 50-plus print for Indian factories, as per the survey-based PMI.  

In a positive sign for India’s flailing merchandise exports, new export orders accelerated in July at a pace that was the fastest since November 2022, with firms reporting increases in fresh orders from customers in the U.S. and neighbouring countries such as Bangladesh and Nepal. 

The 400 or so manufacturers included in the PMI survey responded to the increased workload by hiring more staff but the “solid pace” of job creation was broadly in line with those seen in May and June, S&P Global Market Intelligence said in a note.  

Input costs rise

Input costs rose at a nine-month high pace in July, with firms reporting higher costs for raw materials such as cotton and rising labour costs. In response, manufacturers, who had raised output prices at the fastest pace in 13 months through June, continued to raise selling prices last month. The rate of inflation in output charges was solid, but eased to a three-month low in July.   

Overall confidence levels among producers about business prospects a year ahead were slightly lower in July than June. Around 32% of respondents predicted a rise in output, with just 2% pessimistic about the scenario. 

“The Indian manufacturing sector showed little sign of losing growth momentum in July as production lines continued to motor on the back of strong new order growth,” said Andrew Harker, economics director at S&P Global Market Intelligence. 

 As firms continued to face capacity pressures, it was compelling them to scale up hiring, Mr. Harker noted. If demand remained strong in coming months, hiring activity may continue, he reckoned. 

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