India's manufacturing sector demonstrated impressive resilience in July 2024, as indicated by the HSBC India Manufacturing PMI report, which recorded a strong reading of 58.1 in July. The data showed that the latest figure was only slightly down from 58.3 in June. The report signifies substantial growth and reflects a robust improvement in the health of the sector.
The data also highlighted that despite a marginal slowdown in new orders and output, the overall performance remains well above the long-run average, showcasing the sector's ongoing strength. "India's manufacturing sector continued to post impressive growth in July, despite slightly softer increases in new orders and output. Key positive developments seen in the latest results included one of the fastest expansions in international sales for over 13 years and another robust round of job creation" said the report.
One of the standout features of this month's report is the remarkable expansion in international sales, which reached its second-highest level in over 13 years. This surge in demand from clients across Asia, Europe, North America, and the Middle East has bolstered the manufacturing landscape, leading to significant job creation.
The data indicated that while 7 per cent of surveyed firms reported hiring, the majority around 92 per cent maintained stable headcounts, indicating a cautious approach to workforce expansion. However, the buoyant demand has also exerted upward pressure on prices. Input costs rose at one of the fastest rates in nearly two years, prompting manufacturers to increase selling prices at the steepest rate since October 2013.
The inflationary pressures were attributed to higher costs for essential materials such as coal, leather, and steel, alongside rising labour costs. "India's headline manufacturing PMI showed a marginal slowdown in the pace of expansion in July, but with most components remaining at robust levels, the small drop is no cause for concern. New export orders remain a bright spot, rising by 1pt to the second-highest level since early-2011. The continuous increase in the output price index, driven by input and labour cost pressure, may signal further inflationary pressure in the economy" said Pranjul Bhandari, Chief India Economist at HSBC.
Despite these challenges, manufacturers remain optimistic about future growth, supported by favourable demand conditions and ongoing marketing efforts. The overall sentiment towards production in the coming year has remained stable. The growth is expected to be supported by marketing efforts and new client enquiries. (ANI)
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