New Delhi: India’s manufacturing sector activity growth eased in June, as new business orders and international sales increased at softer rates, resulting in slower expansions in buying levels, employment and output, a monthly survey said Wednesday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index fell from 55.0 in May to 54.2 in June, pointing to the second-weakest improvement in the health of the sector since mid-2022.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) is a gauge of overall conditions derived from measures of new orders, output, employment, supplier delivery times and stocks of purchases.
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
As per the survey, several firms reported an improvement in demand conditions, but others noted subdued client appetite for their products and fierce market competition.
“India’s manufacturing PMI eased to 54.2 in June from 55.0 in May, signalling continued expansion but at a slower pace. The moderation suggests demand has cooled slightly after the earlier surge linked to the Middle East conflict.
“Growth slowed across output, new orders, export orders and employment, with international sales recording their weakest increase since March 2023,” Pranjul Bhandari, Chief India Economist at HSBC, said.
International demand for Indian goods continued to improve in June, but the pace of growth was modest and the weakest in 39 months amid reports of subdued sales to some European markets.
On the price front, with demand growth fading, goods producers became more reluctant to lift their fees. Output charges rose to a moderate degree that was the least pronounced in three months.
“… Both the input and output price indices declined, pointing to softer inflation pressures as geopolitical disruptions begin receding,” Bhandari said.
On the job front, stable workloads and a lack of demand pressure led businesses to pause or scale back hiring. A general absence of capacity pressures restricted recruitment activity at the end of the first fiscal quarter.
“Backlogs of work were broadly unchanged, and employment expanded at the weakest rate in 2026 so far,” the survey noted.
Meanwhile, investor and business confidence dampened in June on concerns over demand and market conditions.
The proportion of firms forecasting output growth in the year ahead halved since May, with a large share of manufacturers signalling neutral expectations, the survey said, adding that the overall degree of optimism retreated to a five-month low.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
