India’s economic activity surged in June 2025, as the HSBC PMI Flash Report revealed the Flash Composite Output Index rose to 61, marking a 14-month high. This strong figure indicates a sharp and above-trend expansion in both manufacturing and services, reflecting solid momentum across India’s key economic engines.

The Purchasing Managers’ Index (PMI) is a critical measure that reflects economic trends in manufacturing and services. A score above 50 signifies expansion, and India has now remained above this threshold for over three years, signaling sustained economic growth. This continued upward trend in PMI data underlines the strength of India’s economic indicators and its ability to maintain momentum even amidst global headwinds.

According to Standard and Poor’s (S&P) Global, the organization behind the survey, the manufacturing sector was a leading force in this growth. The Flash Manufacturing PMI rose from 57.6 in May to 58.4 in June, while the manufacturing output index climbed to 61.5, its highest level since April 2024. This acceleration is attributed to rising domestic and international demand, better operational efficiencies, and increasing technology adoption.

The services sector also performed robustly, with its activity index improving from 58.8 in May to 60.7 in June. The growth in services signifies healthy consumer demand and strong performance in areas like retail, finance, logistics, and technology services. This dual-sector strength helped lift India’s overall economic activity to its best performance in over a year.

An important aspect highlighted in the June data is the rise in new export orders, particularly in manufacturing. Demand increased from Asia, Europe, West Asia, and the United States, supporting India’s growing role as a trusted global manufacturing and supply partner. The robust demand for exports suggests that India’s competitiveness in global trade is improving, driven by enhanced product quality, better infrastructure, and policy support.

Despite the uptick in input and output prices, the rate of inflation eased, offering relief to manufacturers and service providers. This softening in inflation helped companies better manage costs without compromising growth. It also gives the Reserve Bank of India (RBI) some room to maintain its policy stance while keeping an eye on inflation control.

Employment levels also improved during the month. Both manufacturing and services sectors reported hiring, although the pace of job creation in services slowed slightly. Nevertheless, this reflects broader confidence among businesses, supported by growing backlogs and strong order books.

Pranjul Bhandari, Chief India Economist at HSBC, emphasized that the combination of global demand and rising backlogs prompted manufacturing firms to expand their workforce. According to her, this trend is likely to persist if current conditions continue, making employment growth a strong pillar of India’s expanding economy.

However, not all indicators were upbeat. The business sentiment for the year ahead declined to its lowest in over two years, with service providers showing more caution compared to manufacturers. Despite strong current performance, concerns about global macroeconomic volatility, interest rate fluctuations, and geopolitical developments might be tempering expectations for the future.

The data captured in the HSBC PMI Flash Report paints a complex but promising picture of India’s economy in June 2025. The manufacturing PMI, combined with the services PMI, confirms that both sectors are functioning at near-peak efficiency. This has pushed India’s flash composite output index to a new high, placing the country in a position of significant economic resilience and optimism.

This development is critical because it also reinforces India’s position as a top destination for global investment. As the economic expansion continues, investors and policymakers are likely to view this data as evidence that India remains on a high-growth path, capable of weathering external shocks and delivering sustainable performance.

The PMI data also serves as a valuable indicator for future GDP growth, suggesting that the economy may post strong numbers in the upcoming quarterly results. As both demand and output grow, supported by new orders and export momentum, the underlying fundamentals appear robust.

In terms of policy, this performance gives the government a strong platform to accelerate structural reforms and boost investment in key sectors like infrastructure, technology, manufacturing, and green energy. With inflation moderating and hiring stable, fiscal space may also open up for targeted public spending.

It is equally important to note that the current surge in India's economic growth is not merely cyclical. The continued growth in HSBC PMI, steady rise in new export orders, and expansion in employment point towards a structural transformation in the economy. If backed by consistent reforms, skill development, and digital transformation, this growth can become self-sustaining.

In conclusion, the India economic activity June 2025 update provides a compelling snapshot of a resilient and high-performing economy. The HSBC PMI Flash Report underscores that the country is experiencing multi-sectoral growth, powered by manufacturing excellence, services expansion, global demand, and strong domestic fundamentals.

While challenges remain in the form of lower future sentiment and potential external risks, the current trajectory suggests that India’s economy is firmly on a high-growth path. With the right mix of policy, investment, and innovation, India is well-positioned to emerge as one of the fastest-growing major economies globally in the coming years.

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