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India's PMI Falls to 57.4 as Demand, Confidence Cool in June
India's PMI fell to a three-month low of 57.4 in June as demand slowed and business confidence dipped. Easing cost pressures and softer demand could give the RBI room for policy easing.
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India's private sector grew at its slowest pace in three months in June. Demand growth eased and business confidence dipped below its long-run average, HSBC's flash composite Purchasing Managers' Index showed.
The index fell to 57.4 from May's 59.3. Any reading above 50 signals expansion, so the economy remains in growth territory. The slowdown was broad-based. The services PMI dropped to a 17-month low of 57.3 from 59.8. Manufacturing slipped to a three-month low of 54.5 from 55.0.
New orders overall rose at the slowest pace since March. Firms cited competitive pressures and gas shortages as obstacles to securing business, the survey said. Export demand was mixed. Services companies saw slightly faster international sales growth. Manufacturers recorded their weakest rise in new export orders since March 2023.
The demand moderation limited hiring. Employment across the private sector rose only marginally in June, the weakest gain in the current six-month run of expansion. Hiring at both factories and service providers was at its lowest since December.
Cost pressures eased for a third straight month, dropping to their lowest level since January. Selling price inflation also cooled. Overall charges rose at the weakest pace in six months. Some firms refrained from passing on increases because of challenging demand conditions.
Business confidence slipped below its long-run average in June. Sentiment among goods producers dropped to its weakest in nearly four years.
The composite PMI has now held above 57 for six straight months. The June print is the softest since March. The data adds to evidence that India's economy is cooling from the above-trend pace seen earlier this year. Easing cost pressures and softer demand could give the Reserve Bank of India room to consider a policy shift later this year, though markets currently price a first rate cut for early 2025. The next flash PMI reading, due July 24, will show whether the softening extends into the second quarter.