India’s economic momentum remains strong with the overall PMI at 60.7 in July 2024

According to Anand Rathi’s report, the overall Purchasing Managers’ Index (PMI) stood at 60.7 in July, indicating a pick-up in economic activity, although it has declined slightly compared to the previous month, which was at 60.9.

The Services PMI has remained above the 60 mark for seven consecutive months, having recorded 60.3 in July 2024. This consistent performance is attributed to strong demand, rising investments in technology and new business gains.

Favourable economic conditions and optimistic expectations about future production have driven the strongest growth in hiring in this sector.

The manufacturing PMI stood at 58.1 in July, indicating strong expansionary trends, driven by rising demand and a significant increase in international sales. Producers responded to this demand by adding stocks at a rapid pace. Despite the increase in costs from strong demand for input goods, producers maintained their margins by raising selling prices.

The sector continued to hire at one of the strongest rates, although the pace of job creation was slightly slower than in June 2024.

In contrast to the domestic scenario, the global manufacturing scenario looks gloomy. In July 2024, the G-20 manufacturing PMI fell below the 50 mark for the fourth consecutive month, indicating contraction.

The JPMorgan Global Manufacturing PMI slowed due to weak growth in the United States and China, as well as the continuing slowdown in the Eurozone and Japan entering a contraction phase.

Key issues identified included a reduction in new orders and an increase in vendor lead times, pointing to supply-chain disruptions. Only 15 of the 32 countries surveyed saw their manufacturing PMIs rise, with India showing the fastest growth.

Looking ahead, better weather conditions and increased government spending following the recent elections are expected to boost domestic economic activity. However, slowing global growth and rising tensions in the Middle East remain challenges that could hamper domestic growth.

The survey showed that there was a significant increase in new work, well above the long-term average, and strong job creation in both the manufacturing and services sectors. Inflation, which has reached an 11-and-a-half-year high, and rising input costs have increased pressure on businesses.

The services sector PMI stood at 60.3 and maintained its strong performance due to technology investments, robust demand and new business gains. Notably, the sector experienced the strongest growth in new export orders since 2014, indicating healthy international demand for services.

The G-20 GDP-weighted manufacturing PMI continued to decline for the fourth consecutive month, falling below the 50 mark in July. The slowdown in the JPMorgan Global Manufacturing PMI reflects weak growth in major economies such as the US and China, the ongoing slowdown in the eurozone and Japan’s contraction. A decline in new orders and increased vendor lead times due to supply-chain disruptions have significantly impacted global manufacturing activity.

Despite global challenges, India’s manufacturing sector remains resilient, growing at the fastest pace among the countries surveyed. This resilience, along with strong domestic demand and favourable economic conditions, is expected to support sustained growth in the coming months.