India's manufacturing sector exhibited strong expansion in May, primarily fueled by robust external demand, as per S&P Global's survey released on Thursday.
The seasonally adjusted HSBC Manufacturing Purchasing Managers' Index slightly decreased to 58.1 in July from 58.3 in June. However, a reading above 50.0 still signifies expansion.
New orders surged significantly in July amid strong demand conditions, though the growth pace decelerated compared to June. Similarly, production volumes saw substantial growth, albeit at a slower rate than the previous month.
International sales rose at the second-highest rate in over thirteen years, spurred by increased demand from clients in Asia, Europe, North America, and the Middle East.
Consequently, firms continued to augment their workforce in July, though the rate of job creation was milder compared to June. Manufacturers also increased their purchases of inputs, aligning with favorable demand conditions.
On the pricing front, input price inflation was sharp, ranking among the fastest in nearly two years. The intense cost pressures in July were driven by rising labor costs and higher prices for coal, leather, packaging, paper, rubber, and steel. This compelled firms to hike their selling prices at the quickest pace in almost eleven years.
Looking forward, Indian goods producers remain optimistic about future production, expecting growth to be bolstered by marketing efforts and new client inquiries.
