India’s manufacturing PMI rises to 58.3 due to improvement in biz conditions, increased hiring

India’s manufacturing activity increased in June to 58.3 from a three-month low of 57.5 in May. While manufacturing PMI for June increased, it was marginally below the preliminary estimate of 58.5.

The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global said that the increase indicated a sharper improvement in business conditions. “The PMI was comfortably above its long-run average,” it said. 

The Indian manufacturing sector recovered some of the ground it lost in May, with PMI posting nearly five points above its long-run average, the report said. June data showed the buoyant demand conditions that spurred the expansions in new orders, output and buying levels. Firms raised employment at the fastest rate seen in more than 19 years of data collection. While cost pressures receded from May, they were among the highest in over the past two years. 

Maitreyi Das, Global Economist at HSBC, said, “The Indian manufacturing sector ended the June quarter on a stronger footing. The headline manufacturing PMI rose by 0.8 percentage points to 58.3 in June, supported by increased new orders and output. Consequently, firms increased their hiring at the fastest pace in over 19 years.” 

“Input buying activity also rose during the month. On the price front, input costs moderated slightly in June, but remained at elevated levels. Manufacturers were able to pass on higher costs to customers, as demand remained robust, resulting in improved margin. While the overall outlook for the manufacturing sector remains positive, the future output index receded to a three-month low, albeit it remains above the historical average,” said Das. 

Underlying demand remained favourable, new business continued to flow in, performance of the consumer goods industry was strong, strong expansion in sales at manufacturers in India, higher export volumes and successful advertising all fueled growth. 

“As a consequence of ongoing increases in new order intakes, firms stepped up recruitment. The rate of job creation was sharp and the strongest seen since data collection started in March 2005. Staff expenses reportedly intensified in June, which coupled with rising material and transportation costs caused another overall increase in operating expenses,” the report added.  

Rate of input price inflation eased in May but was among the highest since August 2022. 

Selling charges were raised to the greatest extent in over two years, intermediate good makers marked the quickest increase in input costs, consumer goods producers led the upturn in output charges. 

Export orders saw a substantial increase, with better demand from Asia, Australia, Brazil, Canada, Europe and the US.