Manufacturing Output On The Rise

India recorded its second strongest manufacturing PMI since January 2018 reflecting the improvement in the industry’s health.

Manufacturing conditions across India improved at a modest and slower pace at the start of the quarter, reflecting softer rises in output, new orders and employment. On the price front, input cost inflation eased from June’s multi-year high and was broadly in line with the series trend. Subsequently, firms raised their output charges at a modest and slower pace. Meanwhile, business sentiment towards the 12-month outlook for output strengthened to a three-month high.

The Nikkei India Manufacturing Purchasing Managers’ Index® (PMI®) posted 52.3 in July, down from 53.1 in June. Although modest, the latest improvement in the health of the manufacturing sector was the second-strongest (behind June) since January. Indian manufacturing output rose in July, thereby stretching the period of expansion to 12 months. Despite easing from June’s six-month high, the latest upturn was marked and stronger than the current sequence of growth. Anecdotal evidence pointed to favourable market conditions.

Growth continues

New business rose for the ninth consecutive month in July. Moreover, the rate of expansion was marked despite easing from June’s six-month high. Panellists attributed new client wins to strong underlying demand. Mirroring the trend for new business, new export orders rose for the ninth month in succession during July. Although softening slightly since June, the rate of expansion was solid. Panellists commented on strong demand from international markets for Indian goods.

Reflecting sustained periods of growth in output and new orders, firms were encouraged to raise their staffing levels for the fourth successive month in July. However, staff recruitment slowed to a marginal pace. At the market group level, jobs growth was evident in intermediate and investment goods.