India manufacturing PMI falls to 54.2 in June, growth slows to second-weakest pace since mid-2022: HSBC
New Delhi, July 1
India's manufacturing sector continued to expand in June, but the pace of growth slowed to its second-weakest level since mid-2022, according to the latest HSBC India Manufacturing Purchasing Managers' Index survey compiled by S&P Global.
The seasonally adjusted HSBC India Manufacturing PMI fell to 54.2 in June from 55.0 in May. While the index remained above the 50-mark that separates expansion from contraction, it pointed to the second-weakest improvement in the health of the manufacturing sector since mid-2022, ahead of only March.
The PMI report stated "Falling from 55.0 in May to 54.2 in June, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Indexâ„¢ (PMI)... pointed to the second-weakest improvement in the health of the sector since mid-2022 (ahead of March)".
According to the survey, growth remained strong and broadly in line with the long-run series average. However, rates of increase in both output and new orders were the weakest seen in four years, excluding March.
Manufacturers reported mixed demand conditions during the month. While several firms cited an improvement in demand, others pointed to subdued client appetite and intense competition in the market.
The survey showed that the slowdown was driven primarily by the capital goods segment, where growth weakened considerably. In contrast, consumer goods and intermediate goods producers recorded faster growth compared with the previous month.
International demand for Indian goods continued to improve in June, although the pace of export growth was modest and the weakest in 39 months. Survey participants attributed the moderation partly to subdued sales in some European markets.
With demand growth easing, manufacturers became less willing to raise prices. Output charges increased at the slowest pace in three months.
At the same time, cost pressures also softened. Input prices rose at the weakest pace since February, although firms continued to report higher costs for chemicals, electronic items, gas, metals, petroleum products, plastics, rubber and wood.
Input buying growth lost momentum during June and slowed to its weakest level in two-and-a-half years. Consequently, inventories of purchased inputs increased at a softer pace, particularly among capital goods manufacturers.
The survey also indicated limited hiring activity. Employment expanded at the weakest pace in 2026 so far as firms reported an absence of significant capacity pressures. Backlogs of work remained broadly unchanged during the month.
Supplier delivery performance also weakened, with average lead times shortening to the least extent in 15 months.
It also mentioned that business confidence softened in June amid concerns over demand and market conditions. The proportion of firms expecting output growth over the next year nearly halved from May levels, with many manufacturers expressing neutral expectations. As a result, overall optimism among manufacturers fell to a five-month low.
— ANI
Reader Comments
The key takeaway for me is the weak hiring - 'employment expanded at the weakest pace in 2026 so far'. That's a big red flag. If companies aren't hiring, the common man isn't benefiting from this so-called growth. Need more job creation, not just PMI numbers.
As someone who works in supply chain, this input buying slowdown is worrying. When companies stop stocking up, it usually means they anticipate weaker demand ahead. And the comment about European markets being subdued is telling - global headwinds are real, not just domestic issues.
Business confidence falling to a five-month low is the real story here. And the fact that the proportion of firms expecting output growth nearly halved? That's a serious wake-up call. We need a coherent industrial policy, not just election rhetoric. GST simplification and cheaper credit could help.
Could be seasonal. Monsoon months usually see some slowdown. Also, 'weakest improvement' is relative - still above the long-run average. Let's not panic yet. 👍
Interesting that capital goods - which usually drives investment - slowed down considerably. Meanwhile consumer goods and intermediates picked up. This could mean people are still spending on daily needs but business investment is cautious. Classic 'K-shaped recovery' vibes. 🤔
R We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.