Job Creation at an All Time High After 18 Long Years: PMI The rate of job creation also reached its highest level in over 18 years, according to a recent business survey.
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Business activity in India accelerated this month compared to May, driven by notable improvements in both the manufacturing and services sectors. Significant progress in these sectors marks a robust beginning for India's economy this financial year. This follows an 8.2 per cent growth from last year, the fastest among major economies, largely fueled by strong manufacturing performance.
The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 60.9 in June from 60.5 in May. This index has now stayed above the 50-mark, which separates growth from contraction, for nearly three years.
Maitreyi Das, global economist at HSBC, stated, "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." The manufacturing index increased to 58.5 from 57.5 in May, while the services sector's reading rose slightly to 60.4 from 60.2, contributing to India's ongoing expansion despite a slowing global economy.
Das added, "Input cost inflation eased slightly in June, but remained elevated with panellists citing increases in labour and material costs. The output price index suggests manufacturing firms were able to pass on higher costs to customers."
The expansion was supported by strong growth in manufacturing output and orders, as well as business gains in the services sector. New export orders grew for the 22nd consecutive month in June, though the pace slowed slightly after a record high last month. Robust demand led companies to increase hiring, with overall employment rising at the fastest rate since April 2006. Job creation was higher in manufacturing compared to the services sector.
A Reuters poll indicated that job creation remains the biggest challenge for the Narendra Modi government, which was recently re-elected for the third term.
Meanwhile, price increases at firms have eased since May, which is a positive sign for retail inflation. The rise in services input costs slowed to a four-month low, while the pace of price increases charged to clients remained steady.
Although business optimism weakened to a three-month low, the outlook for the coming year remains positive. Companies expect output gains based on pipeline projects, efficiency improvements, and favourable exchange rate forecasts.
