India's Manufacturing Sector Remains Resilient Amidst July Slowdown

India's manufacturing sector showcased resilience in July 2024, registering a strong 58.1 PMI. While a slight dip from June's 58.3 was noted, significant growth, especially in international sales, and robust job creation were highlighted. Inflationary pressures, however, remain a concern due to rising input and labor costs.

India's manufacturing sector displayed notable resilience in July 2024, as per the HSBC India Manufacturing PMI report, which recorded a robust reading of 58.1. Although this marks a slight decline from June's 58.3, it underscores significant growth and a commendable improvement in the sector's health.

The report indicated that despite a modest slowdown in new orders and output, overall performance remains considerably above the long-run average, emphasizing the sector's enduring strength. 'India's manufacturing sector continued to exhibit impressive growth in July, albeit with softer rises in new orders and output. Key developments included one of the fastest expansions in international sales in over 13 years and a strong round of job creation,' the report noted.

A highlight of this month's report is the remarkable surge in international sales, reaching its second-highest level in over 13 years. This increased demand from clients across Asia, Europe, North America, and the Middle East has strengthened the manufacturing landscape, driving significant job creation. While 7 per cent of surveyed firms reported hiring, the majority maintained stable headcounts, reflecting a cautious approach towards workforce expansion.

However, buoyant demand has also led to upward pricing pressures, with input costs rising at one of the fastest rates in nearly two years. Consequently, manufacturers have increased selling prices at the steepest rate since October 2013. The inflation pressures are attributed to rising costs of essential materials such as coal, leather, and steel, along with higher labor expenses.

'India's headline manufacturing PMI reflected a minor slowdown in July's expansion pace, but most components remain at robust levels, so the small drop should not be a cause for concern. New export orders continue to shine, rising by 1pt to the second-highest level since early-2011. The continuous rise in the output price index, driven by input and labor cost pressures, may signal further inflationary impacts,' said Pranjul Bhandari, Chief India Economist at HSBC. Despite these challenges, manufacturers remain optimistic about future growth, buoyed by favorable demand conditions and ongoing marketing efforts. Overall sentiment towards future production remains stable, supported by marketing initiatives and new client inquiries. (ANI)

(With inputs from agencies.)