India’s manufacturing PMI rises sharply to 56.4 in July 2022

The manufacturing PMI for India climbed to an eight-month high of 56.4 in July 2022, moving sharply upwards, after slowing for two consecutive months. The turnaround was driven primarily by an improvement in domestic demand, despite an offset by the dampened global demand.

The output index expanded by 4.0pts, to 59.6 in July 2022, while the new orders index grew by 4.3pts, to 60.0, both reaching their highest since November 2021. However, the new export orders index decelerated to 52.6 in July, from 54.9 in the previous month, reflecting the subdued global demand amid inflation and recessionary pressures. It also shows that domestic demand is gaining momentum. Despite the uptick in manufacturing activity in the nation, the employment index contracted by 0.2pts, to 50.6 in July, while the backlogs of work index, which shows the levels of unfinished orders, remained unchanged from the previous month at 50.5.

The turnaround was driven by an improvement in domestic demand
The total quantity of purchases increased to 58.8, by 1.3pts, while the increase in stocks of purchases, which measures the level of inventory materials, was more pronounced, moving up by 2.9pts, reaching 59.5. The stocks of finished goods, the volume of finished products that are awaiting sales, stood at 49.1, after decreasing to 48.6 temporarily in June, and continued to remain in contraction mode. However, it is interesting to note that this has reached levels that are even better than the pre-pandemic levels, and in fact, recorded its largest values since July 2017. Suppliers’ delivery times reduced to 50.2, by 0.1pt over the previous month, suggesting a marginally shorter average lead time. Input prices climbed down for the fourth month in a row, reaching 57.2 in July, from 58.1 in the previous month. Over the same period, output prices also slowed to 52.6 from 53.2, marking the third consecutive deceleration in prices. Capacity utilisation, which lags a month, slowed further in June, to 50.1, but is likely to see improvement in July on account of the uptick in manufacturing activity. The orders to inventories ratio remained unchanged at 1.1, which is the lowest level since June 2021.

Explore more charts