India clocks robust but softer economic growth in June, PMI recorded at 57.4
New Delhi, June 23
Private sector activity eased a bit in June in India amid geo-political tensions, while overall new orders volumes continued to rise strongly this month, the Purchasing Managers' Index data showed on Tuesday.
Growth of manufacturing output softened a tad as inventory-building lost steam after a few hectic months. June data indicated a slowdown in growth of demand for Indian goods and services, restricting the extent to which output levels were raised. Concurrently, there was a softer expansion in aggregate employment, according to latest HSBC Flash PMI figures.
Falling from 59.3 in May to a preliminary reading of 57.4 in June, the HSBC Flash India PMI Composite Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - signalled a sharp rate of expansion that was nevertheless the weakest since March.
According to panel members, cost pressures and softening demand conditions curbed the latest upturn in business activity.
"Private sector activity eased a bit in June. New export orders remained resilient and the order-to-inventory ratio ticked up, pointing at resilient manufacturing activity down the line. Input costs across the private sector rose, but at the slowest pace in five months," said Pranjul Bhandari, Chief India Economist at HSBC.
Private sector companies continued to report month- on-month increases in their expenses, which they often associated with greater material prices.
In particular, panellists cited higher chemical, food, fuel, gas, metal and utility costs. That said, the overall rate of inflation eased for the third successive month to its lowest since January. Cost pressures remained more pronounced in manufacturing than in services, said the PMI data.
Export trends were mixed in June, as faster growth in the service economy contrasted with the weakest increase at manufacturers since March 2023.
Companies remained confident of an increase in output over the coming 12 months relative to present levels.
— IANS
Reader Comments
Interesting that new export orders remained strong even as domestic demand softened a bit. The services sector seems to be carrying the momentum. Would love to see more manufacturing growth though.
Honestly, I'm not surprised. Small businesses are struggling with rising raw material costs. The PMI numbers are still good but we can't ignore ground realities - many shopkeepers and manufacturers I know are facing pressure on margins.
Good to see employment still expanding, even if at a softer pace. The moderation was expected given the global headwinds. India's story remains one of the best among major economies right now.
The order-to-inventory ratio going up is a good signal for manufacturing in coming months. But I wish the government would focus more on reducing logistics costs - that's where we lose competitiveness against China and Vietnam.
My husband runs a small manufacturing unit - input costs are definitely biting. Chemicals and metals have gone up so much. The RBI needs to keep a close watch on core inflation even if headline numbers look okay. 🙏
57.4 is still expansion territory! People forget that after 50 it's growth. Yes it's slower than May but that's normal volatility. The services export growth is particularly encouraging for
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