June manufacturing PMI at 14-month high of 58.4 driven by export orders

June 2025 Manufacturing PMI: This marks a significant turnaround in manufacturing after PMI dipped to a three-month low in May

India’s manufacturing activity rose to 58.4 in June 2025, up from 57.6 in May, marking a 14-month high, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) showed, according to data compiled by S&P Global on Tuesday.  

 

  Export orders drive manufacturing growth in June

New export orders saw their third-highest growth rate since the survey’s inception in 2005, with more orders from the US in June, the report said. Export order growth was seen across all product categories, including consumer, intermediate, and capital goods.

 

Meanwhile, output volumes also rose at the quickest pace since April 2024, but growth was not evenly distributed across sectors. Intermediate goods producers led growth in terms of volume, while the consumer and capital goods sectors saw moderate growth. The upswing in new orders was driven by marketing initiatives and increased export sales, the survey showed.

 

Manufacturers benefited from the lowest input cost inflation since February, despite rising prices for iron and steel. 

 

Commenting on the growth, Chief India Economist at HSBC Pranjul Bhandari said, "Robust end-demand fuelled expansions in output, new orders, and job creation. To keep up with strong demand — particularly from international markets, as evidenced by the substantial rise in new export orders — Indian manufacturing firms had to tap deeper into their inventories, causing the stock of finished goods to continue shrinking. Finally, input prices moderated while average selling prices rose as some manufacturers passed on additional cost burdens to clients." 

 

Employment jumps amid short-term hiring

Employment levels also surged in June. The survey noted that the month marked the highest pace of hiring in its history. This rise, however, was largely attributed to short-term hiring to meet rising workloads, as backlogs returned to growth after stagnating in May. 

 

Industrial production falls to nine-month low in April

Meanwhile, India’s industrial output grew by just 1.2 per cent in May, marking the slowest pace in nine months, government data showed on Monday. Electricity generation fell sharply by 5.8 per cent, dragged down by an early monsoon. This was the first contraction in nine months and the steepest since June 2020. Mining output also declined by 0.1 per cent, recording its second straight monthly fall. 

RBI cuts rate by 100 bps 

Between February and June, the Reserve Bank of India (RBI) has cut the policy repo rate by 100 basis points, bringing it down to 5.5 per cent, as inflation softened within the central bank’s comfort zone. The rate cut came as a relief for borrowers, with expectations of lower EMIs on long-term loans, particularly benefiting homebuyers.

 

The RBI has revised its retail inflation forecast for the current financial year to 3.7 per cent, down from its earlier projection of 4 per cent in April. 

 

Meanwhile, the central bank has retained its Gross Domestic Product (GDP) growth forecast at 6.5 per cent for 2025-26. The quarterly growth projections stand at 2.9 per cent for April–June, 3.4 per cent for July–September, 3.9 per cent for October–December, and 4.4 per cent for January–March. 

What is PMI?

The PMI is an economic indicator of business activity within a sector. It tracks production levels, new orders, employment, supplier performance, and inventory, based on responses from purchasing managers. A reading over 50 shows expansion in the sector, while a reading below this mark indicates a contraction in the sector. A reading of 50 suggests no change in activity.