Recovering some of the ground lost in May, India's manufacturing sector growth improved in the month of June, as buoyant demand conditions spurred the expansions in new orders, output and buying levels. Concurrently, firms raised employment at the fastest rate seen in more than 19 years of data collection. According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) surged to 58.3 in June 2024 as against 57.5 in May 2024, thus indicating a sharper improvement in business conditions. The PMI was comfortably above its long-run average.
Manufacturing output increased at a sharp pace that was faster than in May, as underlying demand remained favourable and new business continued to flow in. The performance of the consumer goods industry was especially strong, although substantial increases were also noted in the intermediate and investment goods categories. The survey report further noted that staff expenses reportedly intensified in June, which coupled with rising material and transportation costs caused another overall increase in operating expenses.
On the inflation front, the rate of input price inflation eased since May, but was nonetheless among the highest since August 2022. A demand environment conducive to growth allowed manufacturers in India to share additional cost burdens with their clients. Selling charges were raised to the greatest extent in over two years. Besides, stocks of purchased materials rose at a near-record pace, supported by another improvement in suppliers' delivery times. Finished goods inventories decreased further as firms often met sales through warehoused items.
