India’s Private Sector PMI Hits 14-Month High on Surging Demand and Export Boom

India’s private sector saw a significant acceleration in June, driven by strong domestic and international demand. The HSBC Flash India Composite PMI, compiled by S&P Global, surged to 61.0 from May’s 59.3—marking a 14-month high and beating analysts’ expectations of 59.4. A reading above 50 indicates expansion, and June's results reflect nearly four years of consistent growth.

Service sector activity climbed to 60.7 from 58.8, its highest since August 2023, while the manufacturing PMI rose to 58.4 from 57.6. Robust output and record-high new export orders, particularly in manufacturing, fueled this momentum. Composite new orders posted the fastest growth in 11 months, with goods producers seeing stronger gains than services.

International demand surged, with overall new export business reaching its highest level since records began in 2014. While services saw softer growth in export orders compared to May, manufacturing firms responded to rising global backlogs by ramping up hiring. Manufacturing employment growth hit a two-decade peak, while services hiring also remained strong.

Cost pressures eased as input inflation dropped to a 10-month low, helping firms curb price increases and maintain competitiveness. Output prices rose at a slower rate than in May, which had marked a six-month high.

This robust activity followed a report showing inflation dropped to a six-year low in May, offering the Reserve Bank of India more room to focus on growth and potential rate cuts amid external trade tensions. However, overall business confidence declined to its lowest point in over two years, with service providers less optimistic despite steady performance. Manufacturing firms, in contrast, showed slightly improved expectations for the year ahead.