India’s private sector showed strong growth in June, with business activity reaching its fastest pace in more than a year. This was mainly due to strong demand from both within the country and abroad, leading companies to increase production.
According to the HSBC Flash India Composite Purchasing Managers’ Index (PMI), prepared by S&P Global, the PMI rose to 61.0 in June, up from 59.3 in May. This is the highest level in 14 months and marks almost four years of continuous growth.
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Key Highlights:
- Services Sector: The activity index for services increased to 60.7, the highest since August 2023.
- Manufacturing Sector: The manufacturing PMI rose to 58.4, boosted by more production and new orders.
Export Boom
Exports played a big role in this growth. New international orders grew at the fastest rate since 2014 when such data started being tracked. Manufacturing led this export boom, while services also grew but at a slower pace.
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Job Growth
Hiring also improved:
- Manufacturers reported the highest employment growth in over 20 years.
- Service sector hiring remained strong, though slightly lower than in May.
Economist Pranjul Bhandari from HSBC said that global demand and pending orders encouraged companies to hire more workers.
Prices and Inflation
There was some relief on the price front:
- Input cost inflation (the cost of raw materials) dropped to a 10-month low.
- This helped companies avoid raising prices for customers as much as they did in May.
Consumer prices in May were at a six-year low, which could allow the Reserve Bank of India to consider lowering interest rates to support economic growth, especially with global trade facing challenges.
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Business Confidence
Despite the positive numbers, overall business confidence fell to its lowest in over two years.
- Manufacturers felt a bit more hopeful.
- Service firms were more cautious about the future.
