Economic growth in India's manufacturing industry was sustained in July. Companies scaled up production in response to a quicker upturn in factory orders. This, coupled with optimistic growth projections, underpinned job creation and an uptick in input purchasing.
As has been the case in 2019 so far, the sector continued to register a general lack of inflationary pressures. Both input costs and output charges increased at marginal rates that were broadly negligible in the context of historical survey data.
Rising from 52.1 in June to 52.5 in July, the IHS Markit India Manufacturing Purchasing Managers’ Index® (PMI®) was consistent with a further strengthening in the health of the sector.
The latest reading was slightly higher than the average for calendar year 2018 (52.3), but below its long-run trend (53.9).
Consumer goods producers led the upturn in July for the third month in a row, although there was also a stronger improvement in business conditions at intermediate goods makers. The capital goods sub-sector dipped into contraction, with lower sales causing reductions in output and quantities of purchases, while job creation came to a halt.
Aggregate manufacturing production in India increased in July, as has been observed on a monthly basis for two years. The rate of expansion was below its long-run average, but improved from June.
The main factor boosting production was a sustained rise in new work inflows. Despite quickening from June, the pace of expansion was moderate in the context of historical survey data.
New export orders also continued to rise, but here a slowdownin growth was noted. In fact, external sales rose to the least extent since April 2018 as factories took a hit from subdued global trade flows.
Source: IHS Markit