HSBC Flash India composite output Index climbs to 14-month high
Indian businesses recorded a sharp rise in export orders in June, marking the strongest upturn since records began in 2014, according to the latest HSBC Flash Purchasing Managers' Index (PMI) data.
The data shows strong momentum in both manufacturing and services, with companies scaling up output to meet rising domestic and international demand.
Pranjul Bhandari, Chief India Economist at HSBC, said, 'India's flash PMI indicated strong growth in June. New export orders continued to fuel private sector business activity, especially in manufacturing. Meanwhile, the combination of robust global demand and rising backlogs prompted manufacturers to increase hiring.'
Bhandari added, 'Employment growth is also healthy in the services sector despite slightly weakening on a sequential basis from May to June. Finally, input and output prices continued to rise for both manufacturing and services firms, but rates of increase showed signs of softening.'
Manufacturing led the growth, with the Manufacturing PMI Output Index climbing to 61.5 in June from 60.3 in May. The overall Manufacturing PMI rose to 58.4, its best level since April 2024, signalling improved operating conditions. Service sector activity also picked up, supported by rising demand, efficiency improvements, and technology investments.
Companies saw a significant increase in new business, particularly in exports. Survey respondents noted strong international demand from regions including Asia, Europe, the Middle East, and the Americas. While manufacturing exports surged, service sector exports also rose, though at a slower pace.
As backlogs of work continued to grow - now for the 42nd consecutive month - businesses responded by hiring more staff, including both permanent and temporary workers. Employment in manufacturing hit a record high, while hiring in services was slower than in May.
Despite higher demand, cost pressures eased, with input prices rising at their slowest pace in ten months. Companies cited modest increases in labour and metal prices, but the overall rate of cost inflation remained below the long-term average. Selling prices for goods and services continued to rise, but at a slower pace than in May, as many firms avoided passing on costs to attract more business.
Looking ahead, Indian firms remain optimistic about the future, although overall business confidence dipped slightly to a two-year low. Manufacturers showed slightly stronger optimism, while sentiment among service providers was more cautious. (ANI)
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