India’s Manufacturing PMI Falls to 53.5 in July 2026, Lowest Since August 2021

India's manufacturing sector continued to expand in July 2026, although the pace of growth slowed to its weakest level in nearly five years, according to the latest HSBC India Manufacturing Purchasing Managers' Index (PMI) survey, as per news reports. 

The seasonally adjusted PMI eased to 53.5 from 54.2 in June, marking its lowest reading since August 2021 and remaining below the long-run average of 54.2. A PMI reading above 50 indicates expansion. 

New Orders Lose Pace 

Manufacturers continued to receive new business during the month, supported by advertising activities and resilient demand. 

However, the pace of growth was the second weakest in more than four years, as challenging market conditions and lower customer interest in key products affected sales. Production increased further, although output growth remained among the weakest levels seen since mid-2022. 

Export Demand Remains Strong 

While domestic demand moderated, new export orders accelerated during July. 

Survey participants reported stronger demand from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the United Arab Emirates, with intermediate and capital goods producers outperforming the consumer goods segment. 

Purchasing, Inventories and Employment 

Manufacturers continued purchasing inputs to rebuild inventories, although purchasing activity expanded at a 31-month low. 

Supply chain conditions improved as supplier delivery times shortened at a near-record pace. Stocks of purchased inputs increased faster than in June, while finished goods inventories recorded their sharpest increase in more than 11 years. 

Employment expanded for the 29th consecutive month but hiring slowed for the third successive month and was the weakest during the current growth phase. 

Inflation and Business Confidence 

Input cost inflation eased to a five-month low, although companies continued to face higher transportation costs. Selling prices increased at a pace broadly similar to June 2026. 

Read More: RBI MPC Meeting Begins Today; Repo Rate Decision Scheduled for August 5, 2026! 

Conclusion 

India's manufacturing sector remained in expansion territory during July, supported by stronger exports and improving supply chains. However, slower domestic demand, weaker hiring and softer purchasing activity resulted in the weakest PMI reading since August 2021. 

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