The HSBC Flash India PMI Composite Output Index fell to 54.3 in July from 57.1 in June, marking the weakest pace of expansion since March 2022. The slowdown was linked to weaker market conditions, stronger competition, order cancellations, fewer client enquiries and shortages of key raw materials.

New orders continued to grow but at the slowest pace in nearly four-and-a-half years, with the moderation driven mainly by the services sector. Services activity expanded at its weakest rate in 53 months, while manufacturing regained some momentum.

Exports remained a bright spot. New export orders increased at a faster pace across both manufacturing and services, with manufacturers recording the stronger performance. Overall, international sales grew at the fastest rate since March.

Companies also faced higher costs. Input prices rose faster than in June due to higher fuel, labour, material and transportation expenses. Businesses passed on part of these costs to customers, pushing output price inflation to its highest level since April.

Employment increased for the seventh consecutive month, although hiring remained modest, with services adding more jobs than manufacturing. Business confidence eased to a six-month low, reflecting cautious expectations despite hopes of stronger demand over the next year.

In manufacturing, firms increased purchasing activity, improved inventories and benefited from better supplier performance. However, the HSBC Flash India Manufacturing PMI edged down to 53.9 in July from 54.2 in June, indicating a slower but continued improvement in factory conditions.

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