India’s Manufacturing Remains Strong Amid Rising Costs
India’s ManufIn July, due to robust demand, India’s manufacturing activity expanded steadily, according to a recent survey. However, the survey also highlighted high-cost pressures, with prices charged to clients rising at the steepest rate in over a decade.
The HSBC final India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, stood at 58.1 last month. This is slightly lower than the 58.3 recorded in June 2024; however, it still indicates strong growth. The PMI has remained above the 50-mark, which separates growth from contraction, since July 2021, marking the longest expansionary streak in 11 years.
Strong domestic demand drove growth in new orders and output, though sub-indexes fell slightly from June. Exports had risen at the second-fastest pace in 13 years, fueled by international demand from regions like Asia, Europe, North America, and the Middle East. The outlook for the next 12 months remains positive, with firms continuing to hire, though at a softer pace in comparison to the month of June.
High demand increased both input and output price sub-indexes. Cost inflation rose marginally, and prices charged to clients climbed at the sharpest rate since October 2013. Pranjul Bhandari, Managing Director, Chief India Economist, Asean Economist, HSBC India, noted that the continuous increase in output price index, driven by input and labor costs, may drive further inflationary pressure.
With the Reserve Bank of India (RBI) expected to hold interest rates steady in August 2024 and potentially ease policy next quarter, any further rise in inflation could disrupt these plans, keeping rates higher for longer.
acturing Remains Strong Amid Rising Costs