Strong performance! Manufacturing sector PMI hits 17-year high; shows ‘robust improvement in…’

India’s manufacturing sector activity has hit its highest level in 17 years! Private sector activity in India saw robust performance in July, with readings surpassing 60 for two successive months. The manufacturing sector achieved its highest figures in 17 years, outpacing services sector growth, HSBC Flash India Composite Output Index data showed.The manufacturing PMI reached 59.2, marking its highest point in approximately 17 years, which the survey noted as "indicative of a robust improvement in the health of the manufacturing industry". The output growth in goods production exceeded that of service provision.Composite HSBC PMI came in at 60.7 in July, showing a marginal decline from June's 61. The Composite PMI combines weighted averages from comparable manufacturing and services indices.According to an ET report, Pranjul Bhandari, chief India economist at HSBC, said: "India's flash composite PMI remained healthy in July. The strong performance was bolstered by growth in total sales, export orders, and output levels."New orders increased more substantially in manufacturing compared to services, with the former showing acceleration whilst the latter displayed a slowdown. The overall sales growth achieved its fastest rate in a year.Manufacturing firms were at the forefront, showing higher growth rates than service sectors across three parameters - sales, output and export orders, as noted by Bhandari.The survey highlighted that overseas orders reached their highest levels since measurements began, with strong demand coming from Asia, Europe and US markets. "Growth of new export orders accelerated in the service economy, whilst it slowed among goods producers," the report stated.The employment growth in July decelerated to its lowest rate in 15 months, particularly in the services sector. Additionally, both input costs and output charges showed an upward trend in July, as observed by Bhandari.The surveyed companies reported price increases across various commodities including aluminium, cotton, foodstuffs (cooking oil, egg, meat, vegetables), rubber, steel and transportation. The service sector experienced higher input cost increases compared to manufacturing firms."Charge inflation likewise intensified in July, as private sector companies sought to share additional cost burdens with their clients by lifting selling prices," stated the report.The confidence in business reached its lowest point since March 2023, although companies maintained positive expectations for output growth over the next 12 months."Finally, business confidence fell to its lowest mark since March 2023, while employment growth moderated to its weakest pace in 15 months," Bhandari concluded.