Summary :
India's business activity grew more rapidly in June compared to May, driven by advancements in manufacturing and services. Job creation surged to its highest level in over 18 years, indicating a robust start to the financial year. HSBC's flash India Composite Purchasing Managers' Index climbed to 60.9 in June, marking nearly three years above the 50-level that separates growth from contraction.
Business activity in India accelerated in June compared to May, driven by improvements in manufacturing and services, according to a business survey. The survey also revealed that job creation reached its highest level in over 18 years.
Strong performance in both sectors at the end of the first fiscal quarter marked a robust beginning for India's economy this financial year. Last year, India recorded the fastest expansion among major countries at 8.2%, driven in part by vibrant manufacturing.
The HSBC flash India Composite Purchasing Managers' Index, compiled by S&P Global, increased to 60.9 in June from the previous month's final reading of 60.5.
The manufacturing index saw larger gains, rising to 58.5 from 57.5 in May, while the services industry, which remains dominant, saw a slight increase to 60.4 this month from 60.2. These figures contribute to India's ongoing expansion despite a slowing global economy.
The strong expansion was supported by robust growth in both manufacturing output and orders, along with increased business activity among services firms. New export orders continued to expand for the 22nd consecutive month in June, maintaining robust levels, albeit with a slight easing in pace compared to the record growth seen last month.
Strong demand led companies to increase hiring, with overall employment rising at the fastest pace since April 2006. Job creation in the manufacturing sector outpaced that in the services sector.
According to a Reuters poll, boosting employment remains the primary challenge for the NarendraModi government, recently elected for an unprecedented third term earlier this month.
Meanwhile, price increases at firms have moderated since May, which is positive for the outlook on retail inflation. Service sector input costs saw their slowest increase in four months, while the pace of price hikes for clients remained largely steady.
Despite a dip to a three-month low, optimism regarding future output in June stayed above the historical average, buoyed by anticipated gains from pending proposals, efficiency improvements, and favorable exchange rate forecasts for the coming year.
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