India's manufacturing PMI slips to five-year low but stays in growth zone

July's HSBC India Manufacturing Purchasing Managers' Index slipped to 53.5, the lowest reading since August 2021, down from 54.2 the month before. Despite the slowdown, the index stayed above the 50 threshold that separates expansion from contraction, indicating the sector is still growing. Survey respondents cited steady demand, particularly from export destinations like Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the UAE, even as domestic sales softened.

Manufacturers reported faster delivery times for inputs and rising inventory levels, reflecting improving supply-chain conditions. However, hiring growth decelerated for the third month in a row, and input-cost inflation eased to a five-month low while output-price pressures increased. HSBC chief India economist Pranjul Bhandari warned that renewed Middle-East tensions could test the durability of these gains.