India PMI eases to 54.2 as manufacturing growth cools

India?s manufacturing sector continued to expand in June, although growth moderated as softer demand weighed on output, new orders and hiring, while inflationary pressures eased.

The HSBC India Manufacturing Purchasing Managers? Index (PMI) fell to 54.2 in June from 55.0 in May, marking the second-weakest improvement in manufacturing conditions since mid-2022, ahead of March. Despite the decline, the reading remained well above the 50.0 growth threshold and in line with the survey?s long-run average.

Output and new orders continued to increase but recorded their weakest growth rates in four years, excluding March. Export demand also expanded at its slowest pace in 39 months, reflecting weaker sales to some European markets.

Cost pressures eased, with input price inflation slowing to its weakest level since February, while output price inflation softened to a three-month low. Manufacturers, however, continued to report higher costs for chemicals, electronic items, gas, metals, petroleum products, plastics, rubber and wood.

Input purchasing grew at its weakest pace in two-and-a-half years, while finished goods inventories declined at the fastest rate in six months. Employment growth was the weakest recorded in 2026, with backlogs broadly unchanged. Business confidence also weakened, with overall optimism falling to a five-month low amid concerns over demand and market conditions.

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