Indian Factories Surge to 16-Month Growth High, Yet Business Confidence Hits a Wall
India’s manufacturing sector has defied expectations with a blockbuster performance in July, hitting a 16-month high in growth—a rare bright spot in a global economy still grappling with uneven recovery. However, this surge stands in stark contrast to a worrying collapse in business confidence, as manufacturers grapple with rising costs, fierce competition, and uncertain demand prospects. The divergence between current momentum and future pessimism paints a complex picture of India’s industrial health, raising questions about whether the growth spurt can be sustained.
PMI Hits 16-Month Peak: A Surge Driven by Demand
The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 59.1 in July, up from 58.4 in June, marking the highest reading since March 2024 and well above the 50 threshold that separates expansion from contraction. While slightly below the flash estimate of 59.2, the figure underscores robust activity across the sector. New orders grew at their fastest pace in nearly five years, fueled by both domestic and international demand.
Output expanded at a 15-month high, as factories raced to keep up with surging order books.
Domestic demand has been a key driver, with consumer spending on goods like automobiles, electronics, and home appliances rebounding after a brief lull in early 2025. This uptick aligns with government efforts to boost manufacturing through initiatives like “Make in India 2.0,” which offers tax incentives and streamlined regulations for local production.
Meanwhile, export orders—though slowing slightly from June’s 17-year peak—remained strong, with shipments to Southeast Asia, the Middle East, and Africa rising on the back of competitive pricing and a weaker rupee.
To meet demand, manufacturers ramped up procurement at the fastest rate in nearly 13 years, while input stocks surged at the second-highest pace on record. This suggests that businesses are betting on sustained demand in the short term, even as broader economic clouds gather.
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