Manufacturing as well as services activity picked up pace in June compared with May, as per the HSBC Flash India Purchasing Managers’ Indices (PMI) released on Friday, but business optimism levels slumped sharply for both sectors despite an improvement in margins amid a marked reduction in input costs.
Rising demand and capacity pressures compelled manufacturing as well as services businesses surveyed for the PMI to ramp up staffing levels and input buying, with hiring reckoned to have grown at the fastest pace in 18 years.
Manufacturing sector activity recovered after slipping to a three-month low in May, as per the Flash PMI that serves as an advance indicator for a month’s economic momentum, and rose to 58.5 from 57.5 last month. A reading of over 50 on the PMI indicates an expansion in activity levels.
The gains in the services sector have not been as sharp as manufacturing, with the PMI rising marginally from 60.2 in May to 60.4 this month. However, services players did better than goods producers in terms of global demand, with fresh orders reported from around the world.
While input costs moderated for both sectors, manufacturers raised output prices, while services firms moderated their charges to customers. Corporate margins improved across the private sector.
“However, we should remain slightly cautious as the future output index fell sharply,” HSBC economists Pranjul Bhandari and Maitreyi Das wrote in a note. “The overall degree of optimism weakened to a three-month low, but remained above the series average,” they added.
The Flash PMI is typically based on approximately 80%-90% of total PMI survey responses that are received each month for the final PMI numbers released at the start of the subsequent month.
Published - June 21, 2024 10:16 pm IST
