India’s manufacturing PMI hits 5-year low of 53.5 in July 2024

India’s manufacturing sector activity growth slowed to a five-year low in July 2024, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropping to 53.5. This marks a decline from 54.2 in June and falls below the long-run series average of 54.2.

The July PMI reading was the lowest since August 2021 and remained below the flash estimate of 53.9. The deceleration was driven by the second-weakest growth in new orders in over four years, attributed to challenging market conditions and reduced client interest for key products. Despite this, new export orders expanded at a faster pace, with gains reported from markets including Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and the UAE.

Cost inflation for manufacturers eased to a five-month low in July, while output charges rose only moderately. The suppliers’ delivery times index improved, signaling a reduction in supply chain delays. Manufacturers also rebuilt inventory buffers, with increases in both input and finished goods stocks alongside higher purchasing volumes.

The PMI is derived from measures of new orders, output, employment, supplier delivery times, and stocks of purchases. While the index remained above the 50-mark, indicating expansion, the slowdown reflects broader economic challenges in the sector.