Mfg sector growth in July falls to 5-year low on slow demand

During July, the rate of growth in new orders represented the second-weakest performance in over four years

PTI New Delhi

India's manufacturing sector activity growth fell to a five-year low in July due to a slower rise in new business orders amid increasingly challenging market conditions, a monthly survey indicated on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index fell from 54.2 in June to 53.5 in July, marking the lowest reading since August 2021 and falling below the long-run series average of 54.2. The HSBC India Manufacturing Purchasing Managers' Index serves as a gauge of overall conditions derived from measures of new orders, output, employment, supplier delivery times, and stocks of purchases. In Purchasing Managers' Index parlance, a print above 50 means expansion, whereas a score below 50 denotes contraction.

During July, the rate of growth in new orders represented the second-weakest performance in over four years. Panel members indicated that advertising and demand resilience supported sales, which were somewhat curbed by increasingly challenging market conditions and reduced client interest for key items. Job creation across India's manufacturing industry weakened for the third straight month in July, with the rate of increase in employment marking the slowest pace in the current twenty-nine-month period of uninterrupted growth.

Companies saw a notable improvement in supply-chain conditions during July, as input lead times shortened at a near survey-record pace. "The suppliers' delivery times index rose in July, an encouraging sign that supply chain delays are continuing to unwind. However, renewed tensions in the Middle East have raised fresh doubts about how durable these improvements will be," said Pranjul Bhandari, Chief India Economist at HSBC.