In July, India's private sector is seeing immense growth. Manufacturing performance has been robust, and international demand is steadily increasing, according to the latest HSBC Flash India Composite Purchasing Managers' Index (PMI). It was compiled by S&P Global and presented on July 24.
Growth Recorded In July
In July, a score of 60.7 was recorded. The index remained above the 50-mark. This score is slightly down from June's 61.0, but remaining above the 50-mark indicates continuous expansion for the fourth consecutive year.
Manufacturing PMI Growth
According to the report, manufacturing was the lead, and total sales, export orders, and output levels experienced significant increases. The manufacturing PMI surged in over 17 years with a score of 59.2. The services sector saw a slight decline in the activity index.
Reason For Strong Performance
According to Reuters, "The strong performance was bolstered by growth in total sales, export orders and output levels. Indian manufacturers led the way, recording faster rates of expansion than services for all of the three aforementioned metrics," noted Pranjul Bhandari, chief India economist at HSBC.
Resurgence In Price Levels
Although retail inflation eased to a six-year low in June, any resurgence in price levels could complicate the Reserve Bank of India's considerations for potential interest rate cuts. Economists are concerned about the high levels of joblessness and underemployment, particularly among the youth entering the workforce.
Increase In Material Costs
Input costs and output prices rose in July. Companies reported increases in material costs, including aluminium and foodstuffs. Trade negotiations with the U.S. led to uncertainty. It may have contributed to the cautious sentiment among firms. While new orders for manufactured goods reached a near five-year high, employment growth fell to its slowest pace in 15 months.
Price Pressures & Business Confidence
Business confidence dipped to its lowest level in over two years, reflecting concerns over increasing price pressures and intense competition. The overall growth was tempered by rising inflation and a slowdown in job creation.
