Private sector activity rises to 14-month high in June
New Delhi: India's private sector activity surged to a 14-month high in June, supported by both the manufacturing and services sectors, according to a private survey released on Monday.
Favourable demand trends, efficiency gains, and investment in technology supported output, survey respondents noted.
The HSBC Flash India Composite Output Index rose to 61 in June from 59.3 in May. The Composite Purchasing Managers' Index (PMI) is a weighted average of comparable manufacturing and services indices.
Growth in the manufacturing sector climbed to a 14-month high of 58.4 in June, while the services sector expanded to a 10-month high of 60.7.
"India's flash PMI indicated strong growth in June. New export orders continued to fuel private sector business activity, especially in manufacturing," said Pranjul Bhandari, Chief India Economist at HSBC.
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Private sector firms reported strong growth in export orders, particularly among manufacturers, although international sales at services firms expanded at a slower pace. Companies noted strong demand from Asia, Europe, the Middle East, and the Americas.
Robust demand and a rise in outstanding business volumes encouraged Indian firms to hire staff.
"The combination of robust global demand and rising backlogs prompted manufacturers to increase hiring," said Bhandari.
Both full- and part-time employees were hired across permanent and temporary roles, according to anecdotal evidence. Employment growth reached an all-time high in the manufacturing industry, the survey said.
"Employment growth is also healthy in the services sector despite slightly weakening on a sequential basis from May to June," noted Bhandari.
On the cost front, firms reported a marginal increase in input prices in June, driven by higher labour and metal (copper, iron, and steel) costs.
However, the rate of inflation eased to a 10-month low, the survey noted. "Qualitative data showed that while some firms hiked their fees in response to greater expenses, others refrained from doing so in order to secure new business," it added.
Bhandari said that both input and output prices continued to rise in manufacturing and services firms, but the pace of increase showed signs of softening.
Looking ahead, positive business sentiment fell to its lowest level in over two years, according to the survey. There was a mild improvement in manufacturers' confidence compared to a downgrade in expectations among service providers, the survey concluded.
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