India Manufacturing PMI Falls to 53.5 in July, Lowest in Nearly Five Years

India’s manufacturing sector grew in the month of July 2026, by the way this was the slowest growth rate in five years, according to the HSBC India Manufacturing PMI survey conducted by S&P Global. The PMI fell to 53.5 in July from 54.2 in June, due to weaker growth in new orders, employment, and purchasing levels. The sector still remains in positive territory, but the figure indicates that it is slowing down because of lower domestic demand.

What is Purchasing Managers Index (PMI)?

The Manufacturing Purchasing Managers Index (PMI) is an indication of how the economy is doing with regard to manufacturing.

Monthly surveys of people who buy goods in various industries provide the basis of the PMI which measures the level of production and new orders, employment levels, delivery times of suppliers and stock levels.

When the PMI reading is more than 50, it indicates expansion; when it is lower than 50, it indicates contraction.

Although the PMI in India dropped to 53.5, it still indicates growth in the manufacturing sector.

Key Highlight from the PMI Report of July 2026

The latest report showed several noteworthy trends,

• The manufacturing PMI index fell from 54.2 in June to 53.5 in July.
• This report showed the lowest level since the month of August 2021.
• The growth in new domestic orders depicted a sharp slowdown.
• The volume of export orders remained strong due to the high demand for the products from Canada, Egypt, Indonesia, Kenya, Nepal, South Africa, Thailand, and UAE.
• The factory production increased at a slow rate, which was almost the lowest in the past two years.
• Employment continued to grow during the 29th month in a row, but it is worth noting that the pace of hiring has weakened during this period.
• The pace of growth in input costs has reached the lowest level in the period of 5 months.

What Caused Manufacturing Growth Decline?

The main reason for the PMI slowdown is a decrease in new orders, especially in the domestic market.

Respondents reported weaker demand from their clients and less interest in some of the major products being produced.

Purchasing activity decreased as well and reached its slowest rate in 31 months, while the employment rate increased less quickly for the third month in a row.

These trends imply that the production industry becomes more careful while keeping working at high levels.

The manufacturers of consumer goods had weaker demand in comparison to the intermediaries and the production of capital goods that remained strong.