NEW DELHI: India’s manufacturing sector growth eased in June as new business orders and international sales rose at softer rates, leading to slower expansion in output, employment and purchasing activity, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 55.0 in May to 54.2 in June, indicating the second-weakest improvement in the sector’s health since mid-2022.
The PMI is a gauge of overall manufacturing conditions derived from measures of new orders, output, employment, supplier delivery times and stocks of purchases. In PMI terms, a reading above 50 indicates expansion, while a score below 50 denotes contraction.
The survey noted that while several firms reported improved demand conditions, others pointed to subdued client appetite and strong market competition.
“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,” said Pranjul Bhandari, Chief India Economist at HSBC.
Growth slowed across output, new orders, export orders and employment, with international sales recording their weakest increase since March 2023. While overseas demand for Indian goods continued to improve, the pace of growth was modest and the weakest in 39 months, with reports of subdued sales in some European markets.
On the price front, firms became more cautious about raising prices as demand softened. Output charges rose only moderately, marking the least pronounced increase in three months. Both input and output price indices declined, pointing to easing inflationary pressures as geopolitical disruptions receded, Bhandari said.
On the employment front, stable workloads and weaker demand led firms to pause or scale back hiring. A lack of capacity pressures also limited recruitment at the end of the first fiscal quarter.
Backlogs of work were broadly unchanged, while employment grew at its weakest rate so far in 2026, the survey noted.
Investor and business confidence also weakened in June amid concerns over demand and market conditions. The proportion of firms expecting output growth in the year ahead halved compared with May, with many manufacturers reporting neutral expectations, resulting in a five-month low in overall optimism.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to around 400 manufacturers.