PMI steady in July, expands for 4th month

The Markit Purchasing Managers’ Index (PMI) for the month of July remained stationary at the previous month’s level of 55.3 mainly driven by strong growth in the domestic market while demand from abroad also picked up slightly.

Production of new businesses continued to grow considerably while employment levels remained broadly unchanged.

A reading of 50 in the seasonally adjusted index, which gets responses from purchasing managers from 500 industrial companies, indicates expansion of the particular variable while a figure below 50, an overall decrease. The overall index saw an expansion for the fourth consecutive month.

“Business conditions in India’s manufacturing economy continued to strengthen in July. The domestic market remained the primary impetus to growth, although the export market also played a part as its recovery gained pace,” said Gemma Wallace, economist at Markit.

New order index saw a significant rise to 59.7 in July from 58.6 in June. Respondents linked new order and output growth to a combination of better global economic conditions, successful promotional activities and government expenditure, particularly in infrastructure and water projects.

The new export order index, which has been in the negative territory before June, saw a marginal expansion to 52.5 from 52.1. This indicates that even though overseas demand remained subdued compared to domestic demand , it is showing recovery.

Holdings of post-production goods at Indian manufacturing units were largely unchanged in July with a majority of 87.7 per cent panel members maintaining their inventories since June.

Supplier delivery times suffered during the survey period as due to increased production there was greater demand for raw materials. However, the rate of deterioration in vendor performance was only marginal and eased since the month earlier.

Indian manufacturers maintained their workforce in July, despite gains in new orders. The monthly report accorded the difference between a steep increase in production and no increase in employment to improved productivity in the industry.