New Delhi, [India], August 3 (ANI): India's manufacturing sector continued to expand in July, although the pace of growth eased to its weakest level in nearly five years, according to the HSBC India Manufacturing Purchasing Managers' Index (PMI) released on Monday.

The seasonally adjusted HSBC India Manufacturing PMI slipped to 53.5 in July from 54.2 in June, marking the lowest reading since August 2021. However, the index remained above the 50-mark that separates expansion from contraction, indicating continued improvement in manufacturing conditions.

The report said manufacturers continued to benefit from resilient demand, although growth in new orders, input purchasing and employment moderated.

'Manufacturers in India continued to benefit from demand resilience, with a sustained rise in new orders underpinning a further expansion in output during July. Growth cooled again across some metrics, however, such as total sales, input purchasing and employment,' the report said.

However, despite softer domestic demand, export orders gathered momentum during the month, with firms reporting stronger sales to countries including Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand and the UAE. Output also continued to rise, although the pace of expansion remained among the weakest since mid-2022.

The survey noted that Indian manufacturers continued rebuilding inventories as supply-chain conditions improved. Input delivery times shortened at a near survey-record pace, while stocks of both purchases and finished goods increased.

Commenting on the survey, Pranjul Bhandari, Chief India Economist at HSBC, said, 'The suppliers' delivery times index rose in July, an encouraging sign that supply chain delays are continuing to unwind. However, renewed tensions in the Middle East have raised fresh doubts about how durable these improvements will be.'

She added, '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.'

The report also showed employment growth weakening for the third consecutive month, with job creation recording its slowest pace in the current 29-month period of uninterrupted expansion. Meanwhile, cost pressures eased to a five-month low even as transportation costs remained elevated, while business confidence improved from June's recent low on expectations of stronger demand, infrastructure projects and fresh client enquiries.

The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from around 400 manufacturers across the country. (ANI)