India's Manufacturing PMI Continues To Grow Despite Modest Downtick In June

India's manufacturing activity continued to grow despite a modest downtick in June, reflecting sustained demand pick-up as the economy recovers.

The India Manufacturing Purchasing Managers’ Index eased to 57.8 in June from 58.7 in May, according to IHS Markit. A print above 50 means expansion, while those below 50 indicate contraction.

Central to the upturn was demand strength, which positively impacted several other measures such as sales, production, stock building and employment, said the IHS Markit statement. Goods producers registered a sharp increase in new work intakes in June, the strongest since February 2021.

In addition to favourable demand, those surveyed linked the upturn to advertising and new product releases. At the same time, new export orders rose, though at a slower pace than in May.

Supported by buoyant client appetite, manufacturers lifted their selling prices in June. The rate of charge inflation was the strongest in 13 months and above its long-run average. In certain cases, the upturn was attributed to higher labour and input costs. Although average purchasing prices continued to increase in June, the rate of inflation was mild by historic standards and among the lowest seen over the past three years.

Employment rose at a moderate pace that was broadly similar to May. Capacity pressures remained mild in June, with backlogs of work increasing for the eighteenth month in a row but only slightly. Strong increases in sales again led manufacturers to use their existing inventories of finished goods. Post-production stocks fell at the quickest pace in the year-to-date.

Demand strength, new client enquiries and marketing efforts underpinned optimistic forecasts towards growth prospects. Moreover, the overall level of business confidence rose to a six-month high.