India's manufacturing sector growth ticks higher in June; record upturn in employment

Title: Rapid Growth in India’s Manufacturing Sector in June 2024

New Delhi, India – According to a monthly survey, India’s manufacturing sector experienced a significant expansion in June, as new business continued to rise under favorable demand conditions, leading to a record upturn in employment. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) increased from 57.5 in May to 58.3 in June, indicating a stronger improvement in business conditions.

In PMI terms, a score above 50 represents expansion, while a score below 50 indicates contraction. This rapid growth was primarily due to increased demand, higher export volumes, and successful advertising, resulting in a sharp rise in new orders.

The survey also reported that manufacturers increased their hiring at the fastest pace in over 19 years. The rate of job creation was significant, and input buying activity also increased during the month. Staff expenses and rising material and transportation costs led to an overall increase in operating expenses.

Manufacturers were able to pass on some of these increased costs to their clients, raising selling charges to the greatest extent in over two years. Despite the elevated input costs, demand remained robust, resulting in improved margins.

New export orders also increased substantially in June, attributed to better demand from countries such as Asia, Australia, Brazil, Canada, Europe, and the US. The positive outlook for the manufacturing sector remains, with nearly 29% of panellists predicting output growth over the coming year. The survey suggests that improvements in demand and order book volumes, along with advertising and greater client enquiries, will underpin optimism.

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.

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