Economic activity expanded at the fastest pace in 14 months in June: PMI survey

An index measuring India’s combined manufacturing and services performance rose to a 14-month high in June, driven by strong export demand.

The HSBC Flash India Composite Output Index rose to 61 in June from 59.3 in May. A reading above 50 indicates an expansion, and one below 50 denotes a contraction.

“The latest reading was consistent with a sharp rate of expansion that was well above the long-run series average,” the report said. “Notably, the upturn in export orders was the strongest since comparable data became available in September 2014,” it read.

The report also noted that the growth in activity in June was led by manufacturers, although growth picked up pace in the service economy as well.

“Meanwhile, the combination of robust global demand and rising backlogs prompted manufacturers to increase hiring,” Pranjul Bhandari, chief economist at HSBC said. “Employment growth is also healthy in the services sector despite slightly weakening on a sequential basis from May to June.”

In addition, cost and inflationary pressures receded for both manufacturing and services companies.

“Input prices across the private sector increased only modestly during June,” the report said. “Where a rise was reported, firms cited higher labour and metal (copper, iron and steel) costs. That said, the rate of inflation softened to a ten-month low and was below its long-run average. Slower increases were noted in both the manufacturing and service economies.”