India's manufacturing PMI hits 8-month high in July
Premium- India's manufacturing PMI expanded at its quickest pace in eight months in July
India's manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, came at eight-month high as trends for output and new orders strengthen. The PMI rose to 56.4 in July as compared to 53.9 in June, therefore, remaining well above the 50-level separating growth from contraction for a thirteenth month.
While companies stepped up input purchasing, job creation remained marginal amid an uncertain outlook and a general lack of pressure on operating capacities. There was also good news on the price front, as rates of both input cost and output charge inflation subsided, as per the survey.
Indian manufacturing production rose at a sharp pace that was the fastest in eight months. The upturn was broadbased by sub-sector, and led by investment goods. Those panellists that reported higher output volumes mentioned better demand conditions and a pick-up in sales.
“Aggregate new order intakes rose substantially in July, recovering the growth momentum lost in June. The latest increase was in fact the most pronounced since last November, with quicker expansions recorded in all three broad areas of the manufacturing industry," the survey said.
The survey results suggested the Indian economy has remained resilient, at least for now, despite concerns over faster interest rate hikes, massive capital outflows, a weakening rupee and a rapidly slowing global economy.
S&P Global's survey also showed foreign demand expanded at the weakest pace in four months in July and optimism improved only a tad last month.
Firms increased headcount at the slowest pace in three months. “Despite the solid performance of the manufacturing industry, overall job creation remained subdued. The latest increase in employment was marginal and broadly similar to those seen in the current five-month sequence of growth. The vast majority of firms (98%) opted to leave workforce numbers unchanged amid a lack of pressure on operating capacity," as per the survey.
“Output expanded at the fastest pace since last November, a trend that was matched by the more forward-looking indicator new orders. Although the upturn in demand gained strength, there were clear signs that capacity pressures remained mild as backlogs rose only marginally and job creation remained subdued," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
Rahul Bajoria, MD & Chief India Economist, Barclays, said: “India’s July manufacturing PMI accelerated, in contrast to the regional trend, which shows general weakness, especially in export-oriented economies. Still, the weakening global growth outlook and tightening domestic financial conditions could weigh on India’s economic recovery in the coming months."
“The divergence in India’s headline PMI relative to the rest of the region may also reflect the resiliency of India’s domestic demand recovery. And even as global growth weakens, we expect India’s domestic growth to remain reasonably robust. For June, core industries output continued to show reasonable activity levels, while credit growth continues to improve. While the RBI will strive to engineer a soft-landing of the economy, we think some growth sacrifice will be inevitable," he added.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less