India's economic pace accelerated to its strongest in 14 months this June on the back of a sharp increase in production as firms reacted to firmer demand and record-high growth in export orders, HSBC's flash PMI figures released on Monday showed.
The HSBC Flash India Composite Output Index — a seasonally adjusted measure of monthly change in the manufacturing and services sector output — rose to 61.0 in June. This is the highest reading since April 2023 and signifies a strong expansion, well above the long-run average.
The manufacturing industry was the key driver of growth, although the services sector also experienced higher expansion. Production in the manufacturing industry reached a two-month high, while the growth of the service sector reached a ten-month high.
With workloads mounting, firms continued to recruit additional staff in order to keep up with increasing demand.
The report also reported a moderation in inflationary pressures. Input costs expanded at their weakest pace in ten months, mitigating fears over cost-led price shocks.
Panellists attributed the surge in output to a mix of firm demand, better operating efficiencies, and more technology spending.
The HSBC Flash India Manufacturing PMI — which pools information on new orders, production, employment, supplier delivery times, and inventories — rose from 57.6 in May to 58.4 in June. This indicates the best conditions for operating since April this year.
Both service providers and producers of goods recorded increased new business in the last month of Q1 of the fiscal year, with the manufacturing sector reporting a steeper climb. Overall, this was the fastest growth in composite output since July 2023.
Companies blamed June's good performance on high customer demand and good promotional activities.
Weighing in on the report, Pranjul Bhandari, HSBC Chief India Economist, said: "India's flash PMI signaled robust growth in June. New export orders continued to drive private sector business activity, particularly in manufacturing."
Manufacturers, too, increased employment due to increasing backlogs and robust international demand.
"Even employment growth remains healthy in the services segment albeit softer sequentially between May and June.".
However, input and output prices still went up for manufacturing and services companies, although rates of increase indicated a slowing down," Bhandari also said.
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