Private Sector Activity Surges in June as New Orders, Hiring Pick Up

India’s private sector witnessed its strongest growth in over a year in June, driven by a sharp rise in new business orders and export demand, according to the HSBC Flash India Composite Purchasing Managers' Index (PMI) released on Monday.

Compiled by S&P Global, the Composite PMI rose to 61 in June from 59.3 in May (revised downwards), marking the fastest pace of expansion since April 2024. The index has now remained above the 50-mark—which separates growth from contraction—for 47 consecutive months.

The upturn was led by robust performance in the manufacturing sector, though services also recorded a faster pace of growth. "Manufacturers led the upturn in business activity, though growth also picked up pace in the service economy. Rates of increase were at two- and ten-month highs, respectively," the survey noted. Contributing factors included strong demand, improved efficiency, and increased tech investments.

The HSBC Flash India Manufacturing PMI rose to 58.4 in June, up from 57.6 in May, signalling the best improvement in operating conditions since April 2024. The figure is a weighted average based on new orders, output, employment, supplier delivery times, and inventory data.

New business inflows surged across both manufacturing and services, with manufacturers recording a sharper rise. Overall, the pace of expansion in the private sector was the strongest since July 2024.

“New export orders continued to drive private sector activity, especially in manufacturing,” said Pranjul Bhandari, Chief India Economist at HSBC. “Robust global demand and rising backlogs also prompted manufacturers to boost hiring.”

On employment, the survey highlighted a notable increase in recruitment across the private sector in June. Companies reportedly hired both full-time and part-time staff for permanent and temporary roles. While manufacturing reached a series peak in job creation, the services sector also saw healthy hiring, albeit at a slightly slower pace than in May.

June data also pointed to intensified capacity pressures, with backlogs of work rising at a rate faster than the previous month and slightly above the long-run average. This marked the continuation of a three-and-a-half-year-long trend of rising outstanding business volumes.

On the pricing front, input and output prices continued to rise across both sectors, but the pace of increase showed signs of easing.

The Flash PMI, which is based on 75% to 85% of the monthly responses from 800 manufacturing and services firms, offers an early snapshot of economic activity. The final Manufacturing PMI for June is set to be released on July 1, followed by the Services and Composite PMI figures on July 3.

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