Indian manufacturing sector sees robust growth in June: S&P Global

In June, the Indian manufacturing sector regained some of the ground lost in May, with the headline PMI rising to nearly five points above its long-term average. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) complied by S&P Global increased from 57.5 in May to 58.3 in June, signalling a sharper improvement in business conditions.

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.

June saw a stronger expansion in sales at manufacturers in India. Buoyant underlying demand, higher export volumes and successful advertising all fuelled growth, anecdotal evidence showed, as per S&P Global.

As a consequence of ongoing increases in new order intakes, firms stepped up recruitment. The rate of job creation was sharp and the strongest seen since data collection started in March 2005.

Staff expenses reportedly intensified in June, which coupled with rising material and transportation costs caused another overall increase in operating expenses. 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.

Intermediate goods makers registered the quickest increase in input costs, while consumer goods producers led the upturn in output charges.

June saw new export orders increase substantially again. Companies attributed higher inflows of new work from overseas to better demand from Asia, Australia, Brazil, Canada, Europe and the US. Despite easing from May, the rate of expansion was well above its long-run average.

Input buying activity rose in June, extending the current sequence of monthly expansions to three years. Among the main determinants of growth listed by panellists were stock replenishment efforts, robust demand and rising output requirements.

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.

The outlook for the manufacturing sector remained positive, with nearly 29 per cent of panellists expecting output growth over the coming year. Firms forecast further improvements in demand and order book volumes in the year ahead, with advertising and greater client enquiries also underpinning optimism. The overall level of confidence receded to a three-month low, however.

Fibre2Fashion News Desk (DP)