The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) for July released on Tuesday pointed to an improvement in overall operating conditions for the 25th straight month.
In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.
“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,” said Andrew Harker, economics director at S&P Global Market Intelligence.
While the expansion in output was “softest” in three months, new export business rose at the fastest pace since November last year, with business flowing in from the US and neighbouring countries like Bangladesh and Nepal.
On the inflation front, there was some moderation in the pricing power of manufacturing companies as input inflation rose to a nine-month high in July.
Higher prices for raw materials and rising labour costs led to a rise in selling prices. The rate of output inflation was solid, but eased to a three-month low last month, S&P stated.
The survey of 400 manufacturing firms indicated that they expect demand to remain elevated in coming year, supporting employment growth, which has remained muted till now.
“Pressure continued to come on capacity, prompting firms to expand employment solidly again, a trend that is likely to continue in the months ahead should demand remain strong,” Harker said.
Nearly a third of the survey respondents predicted a rise in output in the coming year, compared to 2% who were pessimistic about India’s manufacturing prospects.
