India's Manufacturing PMI Rises To 58.3; Job Creation Highest Since Survey Began
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index increased from 57.5 in May to 58.3 in June, indicating a sharper improvement in business conditions.
India's manufacturing sector activity increased in June due to favourable underlying demand and rising new order intake, which pushed job creation to the highest since data collection started in March 2005, according to a private survey.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index increased from 57.5 in May to 58.3 in June, indicating a sharper improvement in business conditions. A print above 50 indicates expansion. The PMI was also comfortably above its long-run average.
The survey revealed significant increases in the intermediate and investment goods categories, but the consumer goods industry's performance was particularly strong.
In June, new export orders increased significantly. Companies attributed higher inflows of new work from overseas to better demand from Asia, Australia, Brazil, Canada, Europe, and the US.
As a result 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 rate of input price inflation has eased since May, but it is still among the highest since August 2022. In particular, panellists indicated that aluminium, plastic, and steel were up in price.
According to the survey, a growth-friendly demand environment allowed manufacturers in India to share additional cost burdens with their clients. The survey revealed the largest increase in selling charges in over two years. Intermediate goods makers registered the quickest increase in input costs, while consumer goods producers led the upturn in output charges.
Input buying activity rose in June, extending the current sequence of monthly expansions to three years. The panellists listed stock replenishment efforts, robust demand, and rising output requirements as the main determinants of growth. Stocks of purchased materials rose at a near-record pace, supported by another improvement in suppliers' delivery times.
The outlook for the manufacturing sector remained positive, with nearly 29% of panelists anticipating output growth over the coming year. Firms forecast further improvements in demand and order book volumes in the year ahead, with advertising and greater client inquiries also underpinning optimism. However, the overall level of confidence receded to a three-month low.
