India’s economy showed impressive strength in June, with business activity across manufacturing and services surging to a 14-month high, according to HSBC’s flash Purchasing Managers’ Index (PMI) survey, released on Monday.
The HSBC Flash Composite Output Index—an early estimate that tracks overall economic activity—jumped to 61 in June. That’s not only a sharp rise but also well above the 50-point threshold that separates growth from contraction. The index has now stayed in expansion territory for over three years.
Manufacturing Leads the Charge
The boost in business activity was driven primarily by the manufacturing sector. According to the survey compiled by S&P Global, both manufacturers and service providers saw increased output in June. Manufacturing growth reached its highest level in two months, while services hit a 10-month peak.
Strong demand, gains in efficiency, and investment in technology played a big role in the uptick, said survey participants.
Flash PMI Highlights:
- Composite Output Index: 61 (14-month high)
- Manufacturing PMI: 58.4 in June, up from 57.6 in May
- Services PMI: 60.7 in June, up from 58.8 in May
- Manufacturing Output Index: 61.5, up from 60.3
The PMI numbers reflect input from about 400 manufacturers and 400 service firms across the country.
Rising Orders, Hiring, and Export Demand
New business orders soared at the end of Q1 (April–June), with manufacturers seeing the sharpest increase. Export demand was particularly strong, with manufacturers reporting robust orders from regions including Asia, Europe, West Asia, and the Americas.
This surge in demand also led to increased hiring in the manufacturing sector. While job growth in services moderated slightly compared to May, it remained healthy.
“India’s flash PMI indicated strong growth in June,” said Pranjul Bhandari, Chief India Economist at HSBC. “New export orders continued to fuel private sector business activity, especially in manufacturing. Robust global demand and rising backlogs also encouraged manufacturers to hire more workers.”
Inflation Pressures Easing Slightly
Both input and output prices continued to rise for Indian firms, but the pace of inflation showed early signs of cooling. This could offer some relief to businesses concerned about rising costs.
Optimism for the Year Ahead
Despite some softening in overall business confidence—now at its lowest in just over two years—Indian companies remain broadly positive about the future. Manufacturers showed a slight uptick in optimism, while service providers were more cautious.
The final PMI report for June is expected early next month, but for now, the flash data paints a picture of a resilient and growing economy, powered by strong demand, improving productivity, and a healthy labour market.
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