India's private sector shrugs off inflation and job worries, shows robust growth in July: PMI
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India's private sector showed robust growth in July, primarily fuelled by strong manufacturing performance and international demand, the latest HSBC Flash India Composite Purchasing Managers' Index ( PMI ), compiled by S&P Global, showed on July 24.The index recorded a score of 60.7 in July. While slightly down from June's 61.0, it remained firmly above the 50-mark, indicating continuous expansion for the fourth consecutive year.The report highlights that total sales, export orders, and output levels experienced significant increases, with manufacturing leading the charge. The manufacturing PMI surged to 59.2, the highest level in over 17 years, while the services sector saw a slight decline in its activity index.Despite the impressive figures, the overall growth was tempered by rising inflation and a slowdown in job creation. Business confidence dipped to its lowest level in over two years, reflecting concerns over increasing price pressures and intense competition.Additionally, uncertainties surrounding trade negotiations with the U.S. may have contributed to the cautious sentiment among firms. While new orders for manufactured goods reached a near five-year high, employment growth fell to its slowest pace in 15 months.Economists have expressed worries about the high levels of joblessness and underemployment, particularly among the youth entering the workforce.Inflationary pressures have intensified, with both input costs and output prices rising in July. Companies reported increases in material costs, including aluminium and foodstuffs, which were subsequently passed on to consumers.Although retail inflation eased to a six-year low in June, any resurgence in price levels could complicate the Reserve Bank of India's considerations for potential interest rate cuts.
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