June manufacturing growth slows to 54.2 despite softer inflation
India’s manufacturing sector activity continued expansion but at a slower pace in the month of June, as growth slowed across output, new orders, export orders and employment, with international sales recording their weakest increase since March 2023. However, both the input and output price indices declined, pointing to softer inflation pressures as geopolitical disruptions begin receding.
According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased from 55.0 in May to 54.2 in June. With the exception of March, rates of increase in both output and new orders were the weakest seen in four years. International demand for Indian goods continued to improve in June, but the pace of growth was modest and the weakest in 39 months amid subdued sales to some European markets.
The survey report further noted that input buying growth lost momentum in June, receding to its weakest in two-and-a-half years. Hence, stocks of purchases rose at a softer pace, with a particularly sharp slowdown noted in the capital goods category. A general absence of capacity pressures restricted recruitment activity at the end of the first fiscal quarter. Backlogs of work were broadly unchanged and employment expanded at the weakest rate in 2026 so far.
Besides, HSBC India Manufacturing PMI data showed that concerns over demand and market conditions dampened business sentiment in June. The proportion of firms forecasting output growth in the year ahead halved since May, with a large share of manufacturers signalling neutral expectations. The overall degree of optimism retreated to a five-month low.
