India’s private sector activity experienced a significant acceleration in June, as businesses across the nation escalated production to meet burgeoning domestic and international demand. A recent survey highlights unprecedented growth in exports and robust employment gains, signaling a dynamic economic landscape
The HSBC Flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to a 14-month high of 61.0 in June, up from 59.3 in May. This figure surpassed Reuters’ forecast of a modest increase to 59.4, reaffirming India’s sustained economic expansion, now extending for nearly four years
The services sector demonstrated notable vigor, with its activity index rising to 60.7 from May’s 58.8, marking its strongest performance since August of last year. Concurrently, manufacturing activity also intensified, with its PMI reaching 58.4 in June, up from 57.6
New export orders continue to be a significant driver of private sector business activity, particularly within the manufacturing sector,” stated Pranjul Bhandari, Chief India Economist at HSBC. This expansion is largely attributed to robust demand, as composite new orders recorded their fastest growth in eleven months, with goods producers experiencing a more pronounced upturn than their service-sector counterparts
International sales demonstrated a remarkable surge, with overall new export business reaching its highest point since data collection began in September 2014. While service providers noted a slightly slower growth in export business compared to the previous month, the overall trend reflects a strong global appetite for Indian products
The sustained demand, coupled with rising backlogs, has prompted manufacturers to significantly increase their hiring. Employment growth in the manufacturing sector has reached an unprecedented peak since the series commenced over two decades ago. Service providers also continued to expand their workforce at a solid pace, albeit slightly slower than in May.
Furthermore, inflationary pressures eased slightly, with input cost inflation reaching a 10-month low. This moderation has allowed firms to exercise restraint in price adjustments to maintain competitive positioning, resulting in a slower rate of output price increases compared to May’s six-month high. This aligns with recent data indicating inflation eased to over a six-year low in May, enabling the Reserve Bank of India to prioritize economic growth and consider interest rate adjustments.
Despite the strong performance in the private sector, business confidence experienced a slight dip, reaching its lowest point in just over two years. While manufacturers expressed improved optimism, service providers showed more tempered expectations for the coming year.
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