India's manufacturing PMI hits 16-month high at 59.1 in July on high demand

India's Manufacturing PMI for July climbs to 59.1 from 58.4 in June driven by new orders and output, shows HSBC survey as compiled by S&P Global

India’s manufacturing sector grew sharply in July, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) climbing to a 16-month high of 59.1, up from 58.4 in June, according to data released by S&P Global on Friday. The improvement was driven by strong gains in new orders and output, though business sentiment and hiring momentum showed signs of weakness. 

 

 

Factory orders surge to near five-year high

The headline PMI, which indicates overall sector health, was driven by a sharp uptick in factory orders—the fastest pace recorded in nearly five years—as firms benefited from strong domestic demand and effective marketing strategies, the report said. Output growth also surged to a 15-month high, particularly in the intermediate goods segment.

 

“India recorded a 59.1 manufacturing PMI in July, up from 58.4 during the prior month. This marked a 16-month high for the sector, which benefited from strong growth in new orders and output,” said Pranjul Bhandari, chief India economist at HSBC. “At the same time, however, business confidence fell to its lowest level in three years due to concerns over competition and inflation.” 

Hiring stalls, confidence drops to three-year low

Despite the strong expansion, the report highlighted a drop in business optimism, which fell to its lowest point in three years. Only a small share of firms increased headcounts, citing sufficient current staffing. Employment growth slowed to its weakest since November 2024, with 93 per cent of survey respondents indicating no need for additional hiring.   

Cost pressures rise modestly; pricing power improves

Input cost inflation picked up slightly amid rising prices for materials such as aluminium, rubber, and steel. Still, overall cost pressures remained below long-term averages. Selling prices, however, rose at a faster clip, exceeding both input cost growth and historical norms, as companies capitalised on favourable demand conditions. 

Inventory dynamics showed continued restocking of purchases, supported by improved vendor performance, while inventories of finished goods declined as firms met sales from existing stock.  The bottom line: While India’s manufacturing sector remains on a strong footing entering the second half of FY25, the subdued hiring trends and weaker business confidence point to underlying challenges. Inflation concerns and competitive pressures could weigh on the sector’s momentum going forward.