India's Business Growth Surges in June: PMI Report

New Delhi: Regaining the momentum in June with business activity picking up at a quicker pace, Indian businesses, both in the manufacturing and services sectors, expanded at a faster pace in the month of June than the previous month. Besides, there was a substantial upturn in aggregate employment amid robust expansions in total new order intakes and international sales as price pressures receded in the month. The job creation was at its strongest pace in over 18 years, a private survey showed on Friday.

According to the survey carried out by the global banker HSBC Flash India PMI, the headline flash composite Purchasing Managers’ Index or PMI figure rose to 60.9 in June, compared to a downward revised figure of 60.5 in May, while India services sector PMI rose to 60.4 in June from 60.2 in May and manufacturing PMI 62.1 in June from 61.1 in May.

“The composite flash PMI ticked up in June, supported by rises in both the manufacturing and service sectors, with the former recording a faster pace of growth. New orders gained growth momentum for both sectors, with a faster upturn among manufacturers. Meanwhile, new export orders slowed slightly in June, although the rate of expansion was the second fastest since the beginning of the series,” said Maitreyi Das, Global Economist at HSBC.

The survey also showed that manufacturers saw a quicker improvement in the overall health of the sector at the end of the first fiscal quarter, with the HSBC Flash India Manufacturing PMI – a single figure snapshot of factory business conditions calculated from measures of new orders, output, employment, supplier delivery times and stocks of purchases – rising from 57.5 in May to 58.5 in June. “There were stronger contributions from all of its five sub-components,” the survey noted.

“As a result, capacity pressures became evident in June, leading firms to increase their staffing levels to the greatest extent in over 18 years. Input cost inflation eased slightly in June, but remained elevated with panellists citing increases in labour and material costs. The output price index suggests manufacturing firms were able to pass on higher costs to customers. Overall, optimism about future output weakened in June, but remained above the historical average,” Das said.