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New Delhi: India’s manufacturing sector activity rose to a 16-month high in July on the back of expansion in output and new orders, a private survey showed on Friday. However, business confidence fell to its lowest level in three years due to concerns over competition and inflation.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.1 in July, up from 58.4 in June. It was at 57.6 in May, 58.2 in April and 58.1 in March.
India’s manufacturing PMI was 56.3 in February and 57.7 in January. A reading above 50 indicates expansion.
“Firms bought extra inputs to broadly the same extent as in June, however, whilst job creation receded to the weakest since November 2024. Meanwhile, business confidence retreated to its lowest level in three years,” the survey said.
“Cost pressures intensified, though remained negligible by historical standards, while the latest increase in selling prices was stronger than the long-run series average,” it added.
The manufacturing PMI is based on monthly surveys of 400 manufacturers.
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Expansion in new orders
During July, supporting the uptick in the headline figure was a sharp and accelerated expansion in new orders placed with Indian goods producers, the survey said.
“The rise was linked by panellists to favourable demand conditions and successful marketing initiatives. Overall sales rose at the fastest pace in close to five years,” it said.
“Subsequently, production growth strengthened to a 15-month high in July and outpaced the series trend,” it added.
To be sure, during June 2025, there was a sharp escalation in West Asia tensions, with Israel launching major strikes on Iranian nuclear and military targets, prompting Iran to retaliate with a barrage of missiles and drones.
The confrontation dominated global diplomacy, including the G7 Summit in Canada and a NATO meeting in The Hague, as leaders scrambled to contain the fallout.
A US-brokered ceasefire late in the month offered temporary relief, but the fragile truce kept markets and businesses on edge amid continued threats of cyberattacks and regional spillovers.
Also Read: India’s industrial production rises 1.5% in June, at slowest pace in 10 months
Upturn in new inflows
July also saw a quicker upturn in new order inflows, as firms bought extra inputs to broadly the same extent as in June.
Among the main headwinds to growth, survey members listed competition and inflation concerns, the survey said.
“Business confidence fell to its lowest level in three years (during July) due to concerns over competition and inflation. Indeed, input and output prices in India’s manufacturing sector both remained elevated during July,” said Pranjul Bhandari, chief India economist at HSBC.
“Amid softening business confidence, Indian manufacturers hired extra staff at the slowest rate since November 2024,” Bhandari added.
Meanwhile, the survey’s price gauges pointed to a mild intensification of inflationary pressures at the start of the second fiscal quarter.
“On the purchasing side, goods producers sought to replenish their inventories by acquiring additional inputs. Buying levels rose at a fractionally slower pace than in June, and one that was the second-fastest in 15 months,” the survey said.
“Inventories of finished goods decreased further in July, with companies continuing to suggest that sales had been met from warehoused products,” it added.
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