In July, India's private sector exhibited robust growth, reaching its strongest rate in three months, as indicated by the latest report from HSBC India. The HSBC Flash India Composite PMI Output Index, which is compiled by S&P Global, soared to 61.4 in July, a notable increase from the June figure of 60.9.
This index serves as a significant indicator of economic performance, revealing enhancements across both manufacturing and service sectors. A deeper examination of the data reveals that the HSBC Flash India Manufacturing PMI climbed to 58.5 in July, compared to June's final PMI of 58.3, suggesting a substantial uptick in the vitality of the manufacturing sector.
On the other hand, the HSBC Flash India Services PMI also demonstrated significant progress, inching up to 61.1 in July from the previous month's final PMI of 60.5. According to Pranjul Bhandari, Chief India Economist at HSBC, "The rise in output in July was primarily driven by an increase in business activities within the manufacturing sector, while growth in services output accelerated significantly, remaining well above the long-run average." The report further emphasized that new export orders surged at their second-strongest pace in a decade, illustrating that the service economy is demonstrating more robust growth than its manufacturing counterpart.
In response to an increase in backlog work, Indian firms escalated their hiring activities to the highest levels seen in nearly 19 years of data collection. Notably, goods producers reported higher job creation rates than those in the services sector. Additionally, manufacturing companies increased their purchasing activity, which resulted in reduced suppliers' delivery times for the fifth consecutive month.
However, the survey also indicated that overall input prices have risen, driven by heightened costs related to materials, transportation, and labor. Reported contributors to this inflation include notably higher prices for coal, leather, pharmaceutical products, rubber, and steel, as well as increased costs for eggs, meat, and vegetables cited by services companies. As a result of rising input costs, private companies raised their selling prices to recover expenses, leading to the overall rate of charge inflation climbing to the steepest level in over 11 years.
Amid this encouraging growth, private sector firms appear increasingly optimistic about their business prospects for the upcoming year, with many banking on heightened advertising efforts, strong consumer demand, and the acquisition of new clients..