India's private sector expanded at its slowest pace in three months in June, with both factory and services activity dampened by weaker demand. Business confidence also fell to its lowest level since January, according to a PMI survey.
The slowdown in India's private sector growth and cooling business confidence could signal a moderation in economic momentum, potentially impacting future investment and employment trends. Easing cost pressures and price inflation, however, may offer some relief.
India's private sector experienced a slowdown in June, with the Composite Purchasing Managers' Index (PMI) falling to 57.4, the lowest in three months, according to an HSBC survey compiled by S&P Global. This deceleration was driven by weaker demand growth, which affected both manufacturing and services activity. Overall new orders saw their slowest rise since March, with competitive pressures and gas shortages cited as obstacles. Export growth presented a mixed picture, with services companies seeing faster international sales while manufacturers recorded their weakest increase in new export orders since March 2023.
The services PMI declined to a 17-month low of 57.3, and the manufacturing PMI slipped to a three-month low of 54.5. The moderation in demand also curbed job creation, with private sector employment rising marginally, marking the weakest gain in six months. Hiring at both factories and service providers reached its lowest point since December.
Despite the slowdown, cost pressures eased for the third consecutive month, reaching their lowest level since January. Selling price inflation also cooled, with overall charges rising at the slowest pace in six months, as some firms refrained from passing on cost increases due to challenging demand conditions. Business confidence dipped below its long-run average, with sentiment among goods producers reaching its weakest in nearly four years.