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India’s growth in factory output yields ‘solid’ job creation

India aims to become global manufacturing hub

India’s manufacturing sector continues to be robust. As India’s score stood at 57.7 on the S&P Global Purchasing Managers Index (PMI) for July, it marked the 25th straight monthly growth of manufacturing activities. While a PMI of 57.7 in July is a tad lower compared to 57.8 in June, it has beaten projections. In May it had touched 58.7. Importantly, for India new orders have been rising steadily leading to “solid” rise in job creation.

Even as factory output grew the least in three months, growth in new export business picked up to the fastest since last November and that the latest rise was substantial, an S&P statement said.

India’s global ranking in the manufacturing PMI has remained among the top five for sometime now.

PMI is considered an important data point indicating the existing trends of economic activities especially in relation to the manufacturing sector, capturing upstream and downstream activities.

Growth in manufacturing activities is critical for India’s overall economic expansion and employment generation.

While the Reserve Bank of India has projected a 6.5 per cent growth rate for India during the current financial year, the International Monetary Fund recently raised its forecast for the country to 6.1 per cent. The World Bank has pegged India’s growth rate at 6.3 per cent.

Based on the economic indicators, most analysts expect India’s GDP is expected to expand by 8 per cent in the first quarter of the current financial year after posting a 6.1 per cent growth in the last quarter of 2022-2023.

Notably, global manufacturing PMI remained in the red at 48.7—same as the June score.

The global manufacturing sector remained mired in contraction at the start of the second half of the year. July saw output decline further as the downturn in new order intakes was extended to a thirteenth consecutive month, a company statement said. China’s factory output of 49.3 in July showed some improvement over 49 in June, concerns have risen for policymakers with subdued export orders from the west. Employment across China’s manufacturing economy too fell for the fifth straight month in July.

Also read: Why India’s rise to world’s 3rd largest economy surpassing Japan and Germany is no empty boast