NEW DELHI: India’s private sector manufacturing activity expanded at its slowest pace in three months in June as growth in international sales, output, purchasing activity and employment moderated, a private survey showed on Wednesday.
HSBC’s India Manufacturing Purchasing Managers’ Index (PMI), which tracks monthly changes in manufacturing activity, fell to 54.2 in June from 55 in May.
The June reading was also the second-lowest in four years, with only March 2026 (53.9) recording a weaker print during the period. It was the lowest June reading since June 2022.
The latest figure — a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases — was also below the Flash India Manufacturing PMI estimate of 54.5 released last month.
The index remained above the 50-mark, indicating expansion in activity. A reading below 50 signals contraction. June also marked the 56th consecutive month of expansion.
“With the exception of March, rates of increase in both output and new orders were the weakest seen in four years. Several firms reported an improvement in demand conditions, but others noted subdued client appetite for their products and fierce market competition,” the survey said.
The moderation was driven entirely by the capital goods sector, which recorded a sharp slowdown in growth, while consumer and intermediate goods producers posted stronger expansions, S&P Global said.
“India’s manufacturing PMI eased to 54.2 in June from 55.0 in May, signalling continued expansion but at a slower pace. The moderation suggests demand has cooled slightly after the earlier surge linked to the Middle East conflict. Growth slowed across output, new orders, export orders and employment, with international sales recording their weakest increase since March 2023,” said Pranjul Bhandari, chief India economist at HSBC.
Growth in international demand slowed to a 39-month low, with manufacturers citing weaker demand from some European markets.
Cost pressures also eased in June, with input prices rising at the slowest pace since February. However, manufacturers continued to report higher prices for chemicals, electronic items, gas, metals, petroleum products, plastics, rubber and wood. Softer demand also limited firms’ pricing power, with output charges rising at the slowest pace in three months.
“Meanwhile, both the input and output price indices declined, pointing to softer inflation pressures as geopolitical disruptions begin receding,” Bhandari added.
Limited capacity pressures kept hiring subdued at the end of the first quarter of the fiscal year. With backlogs broadly stable, employment expanded at its weakest pace of 2026 so far, the survey said.
Demand concerns and uncertain market conditions also weighed on business confidence. The proportion of manufacturers expecting higher output over the next year halved from May, with many firms reporting neutral expectations.
“The proportion of firms forecasting output growth in the year ahead halved since May, with a large share of manufacturers signalling neutral expectations. The overall degree of optimism retreated to a five-month low,” S&P added.
Source: Business Standard / The New Indian Express
