India's Economic Resilience Shines Amid Global Manufacturing Slowdown

The Indian economy shows continued resilience with the composite PMI at 60.7 in July 2024. Despite global manufacturing struggles, India's sector expanded rapidly. Services PMI remained strong, underpinned by robust demand and technology investments. However, challenges persist due to rising inflation, global tensions, and supply-chain disruptions.

The composite Purchasing Managers' Index (PMI) stood at 60.7 in July, reflecting buoyant economic activity. Although the pace of acceleration eased slightly compared to June's 60.9, the Indian economy continues to showcase its resilience, according to an Anand Rathi report. The Services PMI held steady at 60.3 in July 2024, marking its seventh consecutive month above the 60-mark, driven by strong demand, technology investments, and new business gains.

Favorable economic conditions and optimistic future output expectations have fueled significant recruitment within the sector. The Manufacturing PMI, at 58.1 in July, indicated robust expansion, boosted by increased demand and a notable rise in international sales. Producers responded by swiftly adding stocks, balancing cost increases with raised selling prices.

Despite a slight slowdown in job creation compared to June, the sector maintained strong hiring rates. Globally, the manufacturing outlook remains bleak with the G-20 Manufacturing PMI falling below 50 for the fourth consecutive month. The JPMorgan Global Manufacturing PMI decelerated due to weaker growth in the US and China, ongoing eurozone downturns, and Japan's entry into a contraction phase. Key issues include declining new orders and supply-chain disruptions. However, India's manufacturing sector remains a bright spot, expanding at the fastest rate among surveyed nations, supported by strong domestic demand and favorable economic conditions.

Looking ahead, domestic economic activity is expected to rise, aided by improved weather conditions and enhanced government spending post-elections. Still, challenges such as weakening global growth and Middle East tensions could create headwinds. Significant new work rises and strong job creation were reported across manufacturing and services. However, inflation reached an eleven-and-a-half-year high, adding input cost pressures on businesses.

India's Services PMI maintained its strong performance, driven by technology investments and new business gains, with notable export order growth since 2014. In contrast, global manufacturing struggles continue due to declining new orders and supply-chain issues. Nevertheless, India's resilience and domestic demand bode well for continued growth in coming months.

(With inputs from agencies.)