Manufacturing growth moderated slightly in June, the survey-based S&P Global India Manufacturing Purchasing Managers’ Index (PMI) signalled, with the index easing to 57.8 in June, from 58.7 in May. New orders, however, grew at a fast clip, compelling firms to ramp up production at a pace that was among the fastest in 18 months even as they raised output charges at the quickest pace since May 2022.
A PMI reading of over 50 implies expansion, and June was the 24th successive 50-plus print for Indian factories.
Reacting to strong demand and the uptick in output, firms hired more workers, albeit at a “moderate” pace similar to May, even as their overall level of business confidence rose to a six-month high, S&P Global Market Intelligence said.
While the increase in factory orders last month was among the strongest seen since February 2021, “positive demand dynamics and greater labour costs pushed charge inflation to a 13-month high”. Growth in export orders, however, moderated from May 2023 levels.
Though manufacturers raised prices for their buyers, their own input costs increased at a rate that was one of the lowest in three years, prompting them to purchase fresh raw materials at the second-strongest pace in more than 12 years, the firm said in a release.
“The surge in input buying underscored the optimism and proactive stance of manufacturers, as they sought to capitalise on favourable market conditions and obtain resources to support production growth,” noted Pollyanna De Lima, economics associate director at the firm.
“Presented with buoyant demand, manufacturers seized the opportunity to adjust their pricing strategies. The latest increase in output charges reflected firms’ ability to pass on higher cost burdens to customers while maintaining a competitive edge,” she concluded.
