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India PMI hits 15-month high at 61.1 as manufacturing jumps, services hold
New Delhi
The HSBC India Composite PMI edged up to 61.1 in July from 61.0 in June, marking a 15-month high and reflecting mixed trends in the private sector. The index, which measures monthly changes in combined manufacturing and services output, was boosted by a sharp rise in new orders and strong demand across both goods and services.
A reading above 50 indicates expansion, while a reading below 50 signals contraction.
Services PMI hits 11-month high
The services PMI saw its strongest growth in more than a year, rising to 60.5 from 60.4 in June. This marginal increase was driven by strong demand, new client onboarding, and robust advertising campaigns.
The finance and insurance sectors were the primary drivers of growth. Export orders improved, with Indian firms securing contracts from Asia, Canada, Europe, the UAE, and the US.
Manufacturing at 16-month high in July
The manufacturing sector grew sharply in July, with the PMI rising to a 16-month high of 59.1, up from 58.4 in June. The improvement was driven by strong gains in new orders and output, though business sentiment and hiring momentum showed signs of weakness.
Growth drivers
Business activity remained strong during July, with new orders and output expanding at a quicker rate.
Sales growth across both sectors reached its fastest pace in 15 months. This was supported by strong demand for Indian goods and services.
Hiring slows, business confidence dips
However, not all indicators were upbeat. Hiring slowed, with job creation growing at the weakest pace in 15 months. Business confidence also dipped, as the Future Output Index fell to its lowest level since March 2023.
While both input costs and selling prices rose faster in July, the overall inflation pressures increased.
What does it mean?
A composite PMI of 61.1 indicates a strong activity in the private sector.
It shows that businesses are receiving more orders and producing more goods.
It also shows that consumers and companies are spending, thereby fuelling growth.
High PMI reflects positive optimism, signalling that firms expect demand to surge.
Easing price pressures suggest some room for the Reserve Bank of India to continue supporting growth.
The bottom line
While the Composite PMI shows strong growth, softening business sentiment, subdued hiring, and rising inflationary pressures are likely to weigh on the momentum moving forward.
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