Private sector activity regains momentum, rises to 60.9 in June

Flash PMI data for June

Private sector activity regained some momentum, rising to 60.9 in June from a five-month low of 60.5 in May, as the manufacturing sector accelerated, according to preliminary results of a private survey released on Friday.

“New orders gained growth momentum for both sectors, with a faster upturn among manufacturers,” said Maitreyi Das, Global Economist, HSBC.

Capacity pressures forced firms to increase their staffing levels, with firms highlighting the fastest pace of employment growth in 18 years.

“Growth strengthened at both manufacturers and service providers, with the quicker upturn among the former,” the report noted.

The HSBC Flash India Composite Output Index remained above the 50 mark, which separates expansion from contraction.

Private sector activity had eased to a five-month low a month back because of heatwaves and building price pressures due to high input costs.

New orders expanded faster in June, despite a slight slowdown in export orders, which kept the private sector growing.

Manufacturing activity rose to 58.5 in June from 57.5 last month, while services too increased to 60.4 from 60.2.

Flash PMI records 80 percent of responses from 800 firms across the manufacturing and services industry. Final numbers will be released in the first week of July.

The rate of input inflation softened in June compared with the previous month, but selling prices rose faster for goods manufacturers compared with the previous 12 months.

“The output price index suggests manufacturing firms were able to pass on higher costs to customers,” Das said.

The Indian economy is likely to perform better in FY25 than earlier expected. Fitch Ratings recently revised India’s growth forecast to 7.2 percent from 7 percent projected earlier.

Business confidence, dipped to a three-month low, but remained positive in June with firms expecting marketing efforts and positive demand momentum to help the economy.

The Reserve Bank of India also expects the economy to expand by 7.2 percent in the current fiscal, compared with 8.2 percent last year.