Has India’s Manufacturing Activity Reached a 14-Month High Due to Export Surge in June?

New Delhi, July 2 (NationPress) India's manufacturing sector witnessed a significant boost in June, reaching a 14-month peak due to a notable rise in overseas sales, which enhanced production and led to unprecedented hiring, as revealed by a recent survey.

The HSBC India Manufacturing Purchasing Managers' Index, compiled by S&P Global, increased to 58.4 in June from 57.6 in May. This figure surpassed the long-term average of 54.1 and indicates a remarkable improvement in the sector's health.

“Firms reported one of the quickest increases in foreign orders in over two decades of survey history. Manufacturers raised their input purchasing to the highest level in 14 months, which aided in further expanding their stock of purchases,” the survey noted.

Production levels surged at the fastest rate since April 2024, driven by efficiency gains, demand, and improved sales volumes. The increase was primarily led by intermediate goods producers, while the consumer and capital goods sectors experienced slowdowns.

“The growth of new export orders showed substantial momentum in June, marking the third-highest rate of expansion since data collection began in March 2005. Companies reported increasing demand globally, particularly from the US,” the survey highlighted.

After stagnating in May, outstanding business volumes saw a rise in June. Coupled with strong sales, this led to increased hiring among manufacturers. Employment surged at a record pace, with many respondents indicating short-term recruitment needs.

“Strong end-demand drove increases in output, new orders, and job creation,” stated Pranjul Bhandari, chief India economist at HSBC.

“In order to meet the robust demand—especially from international markets, as indicated by the significant rise in new export orders—Indian manufacturers had to delve deeper into their inventories, resulting in a continued decline in finished goods stock. Lastly, input prices decreased, while average selling prices rose as some manufacturers transferred additional cost burdens to clients,” she added.

Moreover, input price inflation dropped to a four-month low, despite a rise in iron and steel prices, as the rate of increase remained minimal compared to the historical average. “Average selling prices saw a considerable increase, as numerous firms attempted to share additional cost burdens (freight, labor, and materials) with clients. In certain cases, businesses attributed price hikes to increased demand,” the survey revealed.

Employment reached a record high, with the majority of survey participants reporting short-term recruitment. The outlook for the Indian manufacturing landscape remained optimistic in June. However, uncertainties regarding competition, inflation, and shifts in consumer preferences impacted overall sentiment, according to the survey.