India’s economic activity sends mixed signals in July, PMIs show
The PMI rose to 59.2 in July from 58.4 in June, marking its highest level in nearly 17.5 years
[MUMBAI] India’s manufacturing activity strengthened in July, while the services sector showed signs of easing, according to a flash survey by HSBC Holdings.
The manufacturing purchasing managers’ index rose to 59.2 in July from 58.4 in June, marking its highest level in nearly 17.5 years, according to HSBC. In contrast, the services purchasing managers’ index edged down to 59.8 from 60.4 last month, slightly weighing on overall activity. As a result, the composite index eased to 60.7 compared with 61.0 in the previous month.
The indexes reflect business confidence in the economy and are based on preliminary surveys. The data could get revised when final PMI figures are released next month. A reading above 50 indicates expansion in economic activity, while a print below that indicates contraction.
The composite PMI remained healthy, bolstered by growth in total sales, export orders, and output levels, said Pranjul Bhandari, chief India economist at HSBC, in a statement on Thursday (Jul 24). However, inflationary pressures “continue to heat up as both input costs and output charges rose in July,” Bhandari said.
Business confidence fell to its lowest mark since March 2023, while employment growth moderated to its weakest pace in 15 months, Bhandari said.
The mixed economic signals follow an unexpected 50-basis-point cut in the policy interest rate by the Reserve Bank of India last month. While a favourable monsoon has improved the outlook for agriculture, uncertainty surrounding ongoing trade negotiations with the US continues to weigh on India’s export performance.
“New orders increased to a greater extent in the manufacturing industry than in the service economy, as growth quickened in the former whilst it eased in the latter,” HSBC said. BLOOMBERG
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