Flash PMI: Private sector hiring hits 18-year high in June

HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 60.9 in June from last month's final reading of 60.5.
Last Updated : 21 June 2024, 22:27 IST

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New Delhi: Job creation by the private sector in June increased at the fastest pace in over 18 years as an increase in business activities led by robust sales prompted companies to expand capacity, an industry survey conducted by S&P Global showed on Friday.

HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 60.9 in June from last month's final reading of 60.5.

There was a sharper acceleration in the manufacturing sector growth. Flash manufacturing PMI increased from 57.5 in May to 58.5 in June, while the services PMI business activity index increased marginally to 60.4 in June from 60.2 in the previous month.

The PMI print above 50 indicates growth in the sector while below 50 shows contraction. It is based on a survey conducted among around 400 manufacturers and 400 service providers.

“The composite flash PMI ticked up in June, supported by rises in both the manufacturing and service sectors with the former recording a faster pace of growth,” said Maitreyi Das, Global Economist at HSBC.

New orders gained growth momentum for both sectors, with a faster upturn among manufacturers. S&P Global releases separate PMI data for manufacturing and services in the first week of every month.

Manufacturers saw a quicker improvement in the overall health of the sector at the end of the first fiscal quarter, with the HSBC Flash India Manufacturing PMI – a single-figure snapshot of factory business conditions calculated from measures of new orders, output, employment, supplier delivery times and stocks of purchases – rising from 57.5 in May to 58.5 in June.

Although mild, capacity pressures remained evident in June as private sector firms continued to signal higher volumes of outstanding business. Subsequent attempts to clear backlogs and fulfil rising production requirements led to a further increase in aggregate employment, S&P Global noted in the report.

The pace of job creation was marked and the fastest in over 18 years. Growth strengthened at both manufacturers and service providers, with the quicker upturn among the former.

“Capacity pressures became evident in June, leading firms to increase their staffing levels to the greatest extent in over 18 years,” said Das.

Input cost inflation eased slightly in June, but remained elevated with surveyed companies citing increases in labour and material costs.

 “The output price index suggests manufacturing firms were able to pass on higher costs to customers. Overall, optimism about future output weakened in June, but remained above the historical average,” HSBC economist Das added.

Business confidence remained positive in June as private sector firms in India expect marketing efforts to bear fruit and positive demand momentum to be sustained. Predictions of output growth in the year ahead were also attributed to proposals in the pipeline, efficiency gains and forecasts of favourable exchange rates.

As per the survey report, the overall degree of optimism weakened to a three-month low in June but remained above the series average.

Published 21 June 2024, 22:27 IST

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