India's Business Activity Surges in June: Strongest Job Growth in 18 Years

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India's Business Activity Surges in June: Strongest Job Growth in 18 Years

Team Finance Saathi

24/Jun/2024

Key Points:
  1: India's composite Purchasing Managers' Index (PMI) rose to 60.9 in June, signaling accelerated business activity.
  2: Manufacturing index increased to 58.5, reflecting strong growth in output and orders.
  3: Services sector remained robust with a PMI of 60.4, despite a global economic slowdown.

In June 2024, India's economic landscape showcased significant acceleration, buoyed by notable gains in both manufacturing and services sectors. According to the latest HSBC PMI data, India's composite Purchasing Managers' Index surged to 60.9 from May's 60.5, maintaining a robust growth trajectory for nearly three years above the crucial 50-level that distinguishes expansion from contraction.

The manufacturing sector, a cornerstone of India's economic engine, saw its PMI rise to 58.5, up from 57.5 in May. This uptick indicates accelerated growth in manufacturing output and new orders, highlighting resilience amid global economic challenges. Concurrently, the services sector also demonstrated strength, with its PMI nudging up to 60.4 from 60.2, showcasing continued expansion despite external economic headwinds.

A standout feature of June's economic performance was the unprecedented pace of job creation, marking the fastest growth in employment since April 2006. This surge was particularly pronounced in the manufacturing sector, outpacing job gains in services, albeit both contributing significantly to overall employment figures. The robust job market growth is a promising indicator for India's economic health, albeit challenges persist in sustaining this momentum.

The export sector remained a pivotal driver of economic activity, with new export orders expanding for the 22nd consecutive month, albeit at a slightly moderated pace compared to previous months. This resilience in export demand underscores India's competitiveness in global markets despite evolving trade dynamics.

On the inflation front, while firms reported easing price pressures since May, input costs, including labor and materials, remained elevated. This moderation in inflationary pressures has implications for the broader economic outlook, potentially influencing monetary policy decisions in the near term.

Looking ahead, despite a dip in business optimism to a three-month low, the overall sentiment remains positive for the coming year. Companies are optimistic about future output gains, driven by planned expansions, efficiency improvements, and favorable exchange rate forecasts. This forward-looking optimism bodes well for sustaining growth momentum and enhancing economic resilience.

In conclusion, June 2024 marked a period of robust economic performance for India, characterized by accelerated business activity, strong job creation, and resilient sectoral growth. As the economy navigates global uncertainties, the data underscores India's ability to maintain growth momentum, driven by a dynamic mix of manufacturing prowess, resilient services sector, and competitive export performance.

Also Read : Transforming India's Electronics Sector: From Assembly to Component-Level Manufacturing

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India's Business Activity Surges in June: Strongest Job Growth in 18 Years

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