India’s manufacturing activity experienced a slight dip in July, marking the second consecutive month of easing growth.
However, the pace of expansion remained robust, and the sector continued to outperform other major producers.
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The Manufacturing Purchasing Managers’ Index (PMI) came in at 57.7. This reading indicates over two years of the index being above the 50-mark, signaling expansion in the manufacturing sector.
“The sector has maintained its position as one of the star performers globally, bucking the trend of demand weakness seen in other parts of the world,” noted Andrew Harker, economics director at S&P Global Market Intelligence.
“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,” he added.
This is because new orders remained strong in July, and even as output growth moderated to a three-month low, it remained strong. In addition, foreign demand stoked exports at the fastest pace since November.
It may be noted that firms expected activity to stay elevated over the coming year and the future output sub-index remained at 6.53, even as it was slightly lower than in June.
However, rising input prices posed a challenge, and output prices also saw a slight increase, indicating uncertainty regarding inflation.
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Annual retail inflation rose to 4.81% in June after four months of easing, raising expectations for further increases in the coming months. This has led markets to anticipate that the Reserve Bank of India will maintain its key policy rate at a high level for an extended period.
