India’s manufacturing industry wrapped up the first quarter of the current fiscal year on a strong note, with the HSBC India Manufacturing Purchasing Managers’ Index climbing to a 14-month peak in June.
The index rose to 58.4 in June from 57.6 in May, indicating a substantial improvement in overall business conditions. This reading remained well above the long-term average of 54.1, the survey compiled by S&P Global revealed.
The rise in PMI was underpinned by stronger output and new order growth, supported by a significant boost in international demand. Export orders expanded at one of the fastest rates in the survey’s 20-year history.
According to HSBC, the pace of new export order growth in June was the third highest since data tracking began in March 2005. Firms cited stronger demand from global markets, with the US frequently mentioned as a key contributor.
Intermediate goods producers led the expansion, outpacing both consumer and capital goods categories, which saw some deceleration. This group also registered the only noticeable uptick in total sales. Meanwhile, production increased at the quickest pace since April 2024, driven by improved operational efficiency, higher sales volumes, and strong underlying demand.
Hiring Hits Record Pace, Inventories Surge
Employment in the sector saw its sharpest rise since the inception of the survey, with many manufacturers citing short-term hiring to manage higher order volumes. Backlogs, which had stagnated in May, began to rise again in June, adding to labour requirements.
Manufacturers ramped up purchasing activity, leading to the highest increase in input buying in 14 months. This helped expand pre-production inventories, though stocks of finished goods continued to decline sharply as firms drew on existing supplies to meet demand. The fall in inventories was described as “marked by historical standards.”
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Input Prices Ease To 4-Month Low
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s manufacturing PMI reached a fourteenmonth high of 58.4 in June. Robust end-demand fuelled expansions in output, new orders, and job creation. 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. Finally, input prices moderated while average selling prices rose as some manufacturers passed on additional cost burdens to clients.”
Despite upward pressure on iron and steel prices, overall input cost inflation eased to a four-month low and remained modest by historical comparison. However, firms still raised their selling prices, reflecting an effort to offset freight, labour, and raw material costs. In many cases, businesses linked the price hikes to strong client demand.
Average lead times improved, with vendors delivering faster than at any point in the past five months. The consistent improvement in supplier performance occurred despite a noticeable rise in raw material demand.
While overall sentiment among manufacturers remained positive, firms acknowledged that factors such as inflation, competition, and evolving consumer preferences continued to pose challenges to growth expectations in the months ahead.
