India’s Private Sector Accelerates In July On Manufacturing Boom; Details Inside

The Manufacturing PMI rose to 59.2 in July from 58.4 in the previous month, marking the sharpest pace of growth in nearly 17 and a half years

This robust performance was attributed to strong demand conditions, higher export orders, and a steady increase in production

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India’s private sector witnessed significant growth in July, supported by a surge in manufacturing activity and rising international demand, according to the HSBC Flash India Composite Purchasing Managers' Index (PMI), released on Thursday.

Compiled by S&P Global, the headline Composite PMI Output Index increased to 60.7 in July, up from 58.4 in June. This marks the strongest improvement in business activity across the private sector in just over a year, as both manufacturing and services sectors continued to expand.

Manufacturing Outpaces Services In Key Metrics

The Manufacturing PMI rose to 59.2 in July from 58.4 in the previous month, marking the sharpest pace of growth in nearly 17 and a half years. This robust performance was attributed to strong demand conditions, higher export orders, and a steady increase in production.

Meanwhile, the Services PMI stood at 59.8 in July, slightly lower than June’s 60.4. Although services activity continued to expand, the pace of growth showed a mild deceleration.

"India's flash composite PMI remained healthy in July at 60.7. The strong performance was bolstered by growth in total sales, export orders, and output levels. Indian manufacturers led the way, recording faster rates of expansion than services for all of the three aforementioned metrics," noted Pranjul Bhandari, chief India economist at HSBC.

Rising Input Costs And Slower Employment Growth

The survey indicated a sharp uptick in international orders for Indian private firms at the start of the second fiscal quarter (Q2 FY26). However, inflationary pressures also intensified, with both input prices and output charges showing a notable increase in July.

"Meanwhile, inflationary pressures continue to heat up as both input costs and output charges rose in July. Finally, business confidence fell to its lowest mark since March 2023, while employment growth moderated," added Bhandari.

Despite these concerns, businesses remain largely optimistic about output prospects over the next year. A notable rise in hiring, particularly in the services sector, points to ongoing job creation alongside the broader economic expansion.

Optimism Driven By Investment And Capacity Growth

Firms surveyed cited rising demand, strategic investments in technology, and capacity expansion as key drivers behind July’s improvement. While goods producers saw their slowest output increase in three months during May, service providers reported their fastest growth since March 2024, underscoring the resilience of the sector.

The data presents an encouraging outlook for India’s private sector, which continues to build momentum as the second fiscal quarter progresses.