Private sector activity in India slightly eased in June, with overall new orders volumes still showing strong growth, as per the Purchasing Managers’ Index (PMI) data. The growth of manufacturing output softened a bit due to a slowdown in demand for Indian goods and services, leading to a modest increase in employment levels. The HSBC Flash India PMI Composite Output Index for June indicated a sharp expansion, although it was the slowest since March, dropping from 59.3 in May to a preliminary reading of 57.4.
Cost pressures and softening demand conditions were cited as factors that affected the business activity growth, according to panel members. Despite this, new export orders remained robust, and the order-to-inventory ratio increased, suggesting continued manufacturing activity. Private sector companies reported higher expenses, mainly due to increased material prices like chemicals, food, fuel, gas, metals, and utilities.
The rate of inflation eased for the third consecutive month to its lowest since January, with cost pressures more pronounced in manufacturing than in services. Export trends in June varied, with the service economy showing faster growth compared to manufacturers, who experienced the weakest increase since March 2023. Companies, however, expressed confidence in increased output over the next 12 months compared to current levels.
