India’s July factory activity hits lowest level since August 2021

India’s manufacturing sector expanded at its slowest pace in nearly five years in July as overall demand remained soft, while a third consecutive month of slowing job creation pointed to a loss of momentum, a survey showed.

The S&P Global HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.5 in July from 54.2 in June. It was the lowest reading since August 2021 and slightly below the preliminary estimate of 53.9.

A PMI reading above 50.0 indicates growth in activity.

New orders, a key measure of demand, increased at the second-weakest pace in more than four years as challenging market conditions and reduced client interest weighed on sales growth.

Export orders rose at the fastest pace since April but remained modest after falling to a 39-month low in June.

The pace of output growth was broadly unchanged from June. Consumer goods remained a weak spot, while intermediate and capital goods manufacturers performed better.

Employment increased for a 29th consecutive month, although hiring grew at its slowest pace during that period.

Input cost inflation eased to a five-month low in July, even as transportation costs continued to rise. Selling prices increased only modestly, at a pace broadly in line with June, limiting the burden passed on to customers.

Business confidence edged up from June’s recent low, with firms citing positive expectations around demand and infrastructure projects.