India's manufacturing PMI rises to 58.3 in June as job creation hits record high

India's manufacturing PMI rises to 58.3 in June as job creation hits record high

India's manufacturing sector activity, according to the HSBC Purchasing Managers' Index (PMI), for June came in at 58.3, up from 57.5 in the previous month. A PMI reading above 50 indicates expansion in manufacturing activity, while a reading below 50 indicates contraction.

As per S&P Global, the growth was aided by an increase in job creation, which was at a record high. The employment rate was supported by buoyant demand conditions that fueled expansions in new orders, output levels, and procurement activities across the sector. Manufacturing firms reported a strong uptick in employment as they sought to meet escalating production requirements driven by robust domestic demand and increased export orders.

The Indian manufacturing sector rebounded in June. "June data showed that buoyant demand conditions spurred the expansions in new orders, output and buying levels," according to the report.

The cost pressures receded from May but were among the highest over the past two years. While there was a slight easing from the previous month, input prices continued to rise, particularly for materials like aluminium, plastic, and steel. This necessitated manufacturers to increase selling prices at the fastest rate since May 2022, to pass on some of the cost burdens to consumers.

The performance across different segments of the manufacturing industry was strong, with the consumer goods sector leading the charge followed closely by intermediate and investment goods categories. Production levels expanded sharply, outpacing the growth seen in May, aided by sustained demand both domestically and from key international markets such as Asia, Australia, Europe, and North America.

Looking ahead, the outlook for the manufacturing sector remains positive, with nearly 29% of survey respondents anticipating growth in output over the next year. Optimism is buoyed by expectations of continued strong demand, expanding order books, and supportive factors such as effective advertising campaigns and increased client inquiries.

However, overall business confidence moderated slightly in June, marking a three-month low, amid ongoing concerns over persistent inflationary pressures and uncertainties in global markets.