India’s manufacturing PMI reflects strong expansion despite drop

The S&P Global Manufacturing Purchasing Manager’s Index (PMI) fell to 57.8 in the month of June, a decrease from May’s 58.7; however, the index remained above the 50-mark, which indicates expansion rather than contraction.

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India’s manufacturing industry expanded at the second-fastest rate this year in June, although at a slightly slower pace than in May, according to a data released on Monday. The S&P Global Manufacturing Purchasing Manager’s Index (PMI) fell to 57.8 in June, down from May where the figure stood at 58.7.

This marks two years of the index remaining above the 50-mark, which indicates expansion rather than contraction.

To meet the increasing sales, companies significantly ramped up production in the month of June. The S&P Global release says that expansion in output was sharp and one of the fastest recorded in the past year-and-a-half. 

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, has said, “June’s PMI results again showed robust demand for Indian-made products, both in the domestic and international markets,”.

She also mentioned that, “positive client interest continued to support the manufacturing industry, driving growth of output, employment, quantities of purchases and input stocks.

The strong underlying demand has also boosted business confidence, resulting in the highest level of optimism for future business activity this year. Consequently, firms increased their workforce for the third consecutive month, although the rate of employment expansion was moderate despite being the second-highest since November 2022.

While labor and raw material costs experienced a price hike in June, the rate of inflation was only marginally higher than in May and remained below the long-run average. To compensate for the increased costs, companies passed on the expenses to clients, leading to the output prices index reaching at a 13-month high.