HSBC India Manufacturing PMI Rose To 14-Month High Of 58.4 In June

The manufacturing sector experienced a strong end to the first fiscal quarter, marked by improved trends in output and new orders, alongside a record upturn in employment.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index – a single-figure indicator of sector performance – rose to a 14-month high of 58.4 in June, up from 57.6 in May. The headline figure was above its long-run average of 54.1 and pointed to a substantial improvement in the health of the sector.

Production volumes increased at the fastest pace since April 2024, reportedly fuelled by efficiency gains, favourable underlying demand and greater sales volumes. This acceleration was solely led by intermediate goods makers, however, with slowdowns in the consumer and capital goods segments. June also saw a quicker upturn in new order inflows. The rate of expansion was the strongest in close to a year. According to panel members, the increase was supported by marketing efforts and a substantial rise in exports.

The growth of new export orders gained considerable momentum in June. The rate of expansion was the third highest since data collection started in March 2005. Firms noted strengthening demand from across the globe, with the US mentioned more frequently.

Having stagnated in May, outstanding business volumes increased in June. Coupled with robust sales, this boosted hiring among manufacturers. Employment rose at a survey-record pace, with panellists mostly pointing to short-term recruitment.

Input price inflation retreated to a four-month low, despite rising iron and steel costs. The rate of increase was negligible relative to the series average. Average selling prices rose markedly, however, as several firms sought to share additional cost burdens (freight, labour and materials) with their clients. In some instances, companies attributed upward revisions to demand buoyancy.

Strength in new business intakes was a significant factor influencing trends in purchasing activity and input stocks. Pre-production inventories rose at a quicker pace than in May, while the surge in buying volumes was the greatest since April 2024. Inventories of finished goods fell again, however, as businesses often had to dig into warehouses to fulfil demand growth.

The outlook for the Indian manufacturing sector remained positive in June. That said, uncertainties surrounding competition, inflation and changes in consumer preferences weighed on sentiment.