HSBC India Manufacturing PMI®
The HSBC India Manufacturing Purchasing Managers' Index (PMI) declined to 53.5 in July 2026 from 54.2 in June, marking the lowest reading since August 2021 and falling below the long-run series average of 54.2. Despite the decline, the index remained above the 50.0 threshold that separates expansion from contraction, indicating a continued improvement in manufacturing sector conditions, albeit at a below-trend pace.
Performance Data
New orders grew at the second-weakest pace in over four years, though panel members noted that advertising and demand resilience supported sales. The consumer goods segment showed particular weakness with notably softer increases in both new orders and output, while intermediate and capital goods makers registered stronger rates of expansion. Output growth was little-changed from June and among the softest since mid-2022. Employment increased at the slowest pace in the current 29-month period of uninterrupted job creation, marking the third straight month of weakening job growth.
International sales regained momentum with new export orders accelerating and showing gains from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and the UAE. Input purchasing growth retreated to a 31-month low though remained marked, while stocks of purchases accelerated from June. Post-production inventories expanded at the most marked pace in over 11 years following a solid drop in June.
Macroeconomic Context
Supply chain conditions showed notable improvement with input lead times shortening at a near survey-record pace. Cost pressures receded to their weakest in five months, though companies continued to report higher prices for transportation specifically. Output charges increased moderately at a rate broadly similar to June. Backlogs of work accumulated at the strongest rate in a year, though only slightly overall.
Material Trends
The report highlighted a divergence between domestic and international demand, with export orders strengthening while overall new order growth cooled. Sectoral performance varied significantly, with consumer goods weakening while intermediate and capital goods maintained stronger expansion. Businesses were focused on rebuilding reserve buffers through increased purchasing activity despite slowing order growth.
Observations
Business sentiment strengthened from June's recent low, with firms signaling optimism based on expected demand resilience, infrastructure projects, and new client enquiries. Some businesses anticipated improved market conditions and successful marketing initiatives. The suppliers' delivery times index rose, indicating continued unwinding of supply chain delays, though renewed tensions in the Middle East raised doubts about the durability of these improvements.