India’s manufacturing sector recorded its strongest performance in over a year, with the HSBC-S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rising to 58.4 in June, up from 57.6 in May.
This marks the fastest pace of growth since April 2024 and aligns with preliminary estimates released earlier.
A PMI reading above 50.0 indicates expansion, and June’s score reflects broad-based growth across output, new orders, and employment.
Pranjul Bhandari, Chief India Economist at HSBC, noted, “Robust end-demand fuelled expansions in output, new orders, and job creation.”
Exports drive momentum
One of the key drivers behind the June surge was a steep increase in international orders, which rose at their quickest pace in nearly a year.
Export demand registered the third-highest growth since the index began collecting data in 2005, with the US market playing a significant role in this rise.
Factory output responded accordingly, registering its fastest expansion in 14 months, supported by both domestic and overseas demand.
Manufacturers across various sectors reported higher production volumes to meet increased order inflows.
The buoyant demand prompted firms to hire at an unprecedented pace, marking the highest employment growth since the survey began over two decades ago.
Many manufacturers increased staff capacity to keep up with growing workloads, indicating long-term confidence in continued demand.
Input costs ease, selling prices rise moderately
Input cost inflation slowed to its lowest level in four months, despite selective increases in raw material prices such as iron and steel.
Manufacturers reported some relief on the cost front, which helped manage overall production expenses more effectively.
However, firms still passed on higher freight, labour, and material costs to customers, though at a slightly slower pace than in the previous month.
Despite the strong data, business confidence slipped to an eight-month low. Some manufacturers expressed caution over rising competition, inflationary pressures, and potential shifts in consumer demand.
Trade tensions with the United States added to the unease, as ongoing negotiations on tariffs for auto parts, steel, and agricultural products remain unresolved.
Talks are facing a July 9 deadline and could impact future trade dynamics with India’s largest export partner.
The June PMI highlights strong momentum in India’s manufacturing sector, with exports and hiring leading the surge.
However, external pressures such as global trade friction and changing market preferences could pose challenges in the months ahead.
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