India's manufacturing PMI rises to a 14-month high in June

Mint

10 hours ago

New Delhi: India's manufacturing sector activity rose to a 14-month high in June on the back of expansion in output, new orders, and job creation, a private survey showed on Monday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 58.4 in June, up from 57.6 in May. It was at 58.2 in April and 58.1 in March.
India's manufacturing PMI was 56.3 in February and 57.7 in January. A reading above 50 indicates expansion.
To be sure, the headline figure was above its long-run average of 54.1, which suggests a substantial improvement in the sector's health.
"The manufacturing sector experienced a strong end to the first fiscal quarter, marked by improved trends in output and new orders, alongside a record upturn in employment," the survey said.
"Companies also welcomed one of the fastest increases in external orders in the over 20 years of survey history. Goods producers lifted input buying to the greatest extent in 14 months, which supported a further expansion in stocks of purchases," it added.
The manufacturing PMI is based on monthly surveys of about 400 manufacturers.
During June, production volumes increased at the fastest pace since April 2024, reportedly fuelled by efficiency gains, favourable underlying demand and greater sales volumes, the survey said.
It added that the acceleration was solely led by intermediate goods makers, however, with slowdowns in the consumer and capital goods segments.
To be sure, June 2025 was marked by a sharp escalation in West Asia tensions, with Israel launching major strikes on Iranian nuclear and military targets, prompting Iran to retaliate with a barrage of missiles and drones.
The confrontation dominated global diplomacy, including the G7 Summit in Canada and a NATO meeting in The Hague, as leaders scrambled to contain the fallout.
A US-brokered ceasefire late in the month offered temporary relief, but the fragile truce kept markets and businesses on edge amid continued threats of cyberattacks and regional spillovers.
June also saw a quicker upturn in new order inflows, as the rate of expansion was the strongest in close to a year. The increase was supported by marketing efforts and a substantial rise in exports, the survey said.
"To keep up with strong demand — particularly from international markets, as evidenced by the substantial rise in new export orders — Indian manufacturing firms had to tap deeper into their inventories, causing the stock of finished goods to continue shrinking," said Pranjul Bhandari, chief India economist at HSBC.
"Finally, input prices moderated while average selling prices rose as some manufacturers passed on additional cost burdens to clients," she added.
India's economic growth rebounded in the March quarter following a slowdown in September.
Gross domestic product (GDP) for fiscal year 2025 grew by 6.5%, supported by a robust 7.4% expansion in the January-March quarter, show provisional data from the Ministry of Statistics and Programme Implementation.
Both figures were lower than growth in the corresponding year-earlier periods—India's economy grew at 7.8% in the fourth quarter of FY24 while the full-year GDP growth was revised to 9.2%.
Despite global uncertainties, growth was driven by strong output in agriculture, manufacturing, construction, mining, and services sectors in FY25 compared to FY24.
India's economic outlook for FY26 is marked by cautious optimism, with GDP growth projected between 6.3% and 6.8%, according to the Ministry of Finance.
Interestingly, manufacturing output grew at 4.5% to ₹ 29.54 trillion in FY25, although it comes on a higher base, with FY24 manufacturing output growing at 12.3%.