India Manufacturing PMI at 53.5 in July as export orders accelerate
Synopsis
India's factory activity stayed in expansion for another month, but the real story is the export surge — demand pouring in from Canada to Kenya to the UAE. Finished-goods inventories just logged their sharpest rise in over 11 years, yet hiring hit its weakest pace in nearly two and a half years. The divergence between order books and job creation is the tension at the heart of July's PMI print.
Key Takeaways
HSBC India Manufacturing PMI came in at 53.5 in July 2025 , down from 54.2 in June but firmly in expansion territory.
Export orders saw a marked acceleration , with demand from Canada , Egypt , Indonesia , Kenya , Nepal , South Africa , Thailand , and the UAE .
Inventories of finished goods rose at the sharpest pace in more than 11 years .
Input cost inflation fell to a five-month low , but output charge inflation accelerated as firms passed costs to customers.
Employment growth slowed to the weakest pace in the current 29-month job-creation streak.
Supply-chain conditions improved, with input delivery times shortening at a near survey-record pace .
India's manufacturing sector sustained its expansion streak in July 2025, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) settling at 53.5, driven by resilient domestic demand and a marked surge in export orders, according to data released on Monday, 3 August. The reading remained comfortably above the 50-point threshold that separates growth from contraction, though it eased from 54.2 recorded in June.
Key Developments
The headline PMI dip of 0.7 points from June reflects a moderation in the pace of growth rather than a reversal. Manufacturers reported sustained increases in new orders and output, with firms crediting advertising efforts and underlying demand resilience as the primary drivers of sales momentum.
A standout feature of the July survey was a marked acceleration in export orders — identified by HSBC India as the major positive takeaway. Indian manufacturers reported stronger demand from a geographically diverse set of markets including Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and the UAE.
What HSBC's Chief India Economist Said
Pranjul Bhandari, Chief India Economist at HSBC, noted that improving supplier delivery times signalled a continued easing of supply-chain bottlenecks, while flagging that geopolitical developments could pose risks going forward.
'Meanwhile, output and new export orders strengthened, pointing to resilient demand, particularly from overseas markets. Price pressures also shifted: input cost inflation moderated, but output charge inflation accelerated, indicating firms are once again passing through price increases to protect margins,' Bhandari said.
Supply Chain and Inventory Conditions
Input delivery times shortened at a near survey-record pace, enabling companies to rebuild stocks of purchases. Inventories of finished goods also rose, recording the sharpest increase in more than 11 years — a signal that producers are positioning for continued demand. Intermediate and capital goods producers led output growth, while the consumer goods segment saw comparatively softer expansion.
Employment and Cost Pressures
Despite the broadly positive demand picture, hiring activity moderated. Employment growth slowed to the weakest pace in the current 29-month period of job creation — a nuance that warrants attention given India's labour absorption challenge. On the cost side, input inflation fell to a five-month low, offering some relief to manufacturers, though output price inflation picked up as firms moved to protect margins.
What to Watch
The combination of strong export order growth and easing supply-chain pressures positions Indian manufacturing favourably heading into the second half of the fiscal year. However, the slowdown in hiring and the risk of geopolitical disruptions — particularly to trade routes serving the Middle East and Africa — remain factors to monitor closely in the months ahead.
Point of View
But the divergence within the data deserves scrutiny. Export orders are accelerating and finished-goods inventories just hit an 11-year high — yet employment growth is at its softest in over two years. That gap suggests manufacturers are sweating existing capacity rather than adding headcount, which limits the PMI's value as a jobs story. With input inflation at a five-month low, the margin-protection move — passing higher output prices to buyers — also signals that demand may be less price-elastic than the headline expansion implies. Geopolitical risk to trade corridors, flagged by HSBC's own economist, is not priced into the optimism around export diversification.
NationPress
3 Aug 2026
Frequently Asked Questions
What is India's Manufacturing PMI for July 2025?
India's HSBC Manufacturing PMI for July 2025 came in at 53.5, indicating continued expansion in factory activity. The reading eased slightly from 54.2 in June but remained well above the 50-point growth threshold.
Why did India's manufacturing PMI ease from June to July?
The PMI moderated from 54.2 in June to 53.5 in July, reflecting a slower pace of growth rather than a contraction. Survey participants pointed to challenging market conditions and softer client interest in certain product segments as contributing factors.
Which countries are driving India's export order growth?
Indian manufacturers reported stronger demand from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and the UAE in July 2025. HSBC India identified this acceleration in export orders as the major positive takeaway from the month's survey.
What happened to jobs in India's manufacturing sector in July?
Employment growth in Indian manufacturing slowed in July, expanding at the weakest pace in the current 29-month period of job creation. Despite rising output and orders, firms appear to be utilising existing capacity rather than significantly expanding their workforce.
What are the risks flagged for India's manufacturing outlook?
HSBC Chief India Economist Pranjul Bhandari flagged geopolitical developments as a potential risk to supply chains and export momentum. Additionally, the acceleration in output price inflation — even as input costs eased — could weigh on demand if buyers become more price-sensitive.
