Indian factory floors lost some serious steam last month. Manufacturing growth just slumped to its second-slowest pace in four years. The culprit? Softening demand. It dragged down both production and hiring, though a slight dip in raw material costs offered a tiny bit of breathing room.
The HSBC India Manufacturing Purchasing Managers’ Index, put together by S&P Global, slid down to 54.2 in June. That is a drop from May’s 55.0, and it even missed the early flash estimate of 54.5. You have to look back to mid-2022 to find a weaker month, with only this past March looking worse. Still, it is not a total disaster. Any number above 50 means expansion, and June’s figure sits right on the long-term average. But the momentum is clearly flagging.
New orders tell the real story here. This crucial demand metric grew at its second-weakest rate in two years. Export sales were particularly sluggish, posting their weakest growth in over three years. Factory bosses blamed quiet European markets for the export slump. Naturally, production followed suit, with capital goods dragging down overall output.
With buyers pulling back, factories lost their pricing power. They simply could not hike prices. In fact, 93% of surveyed firms kept their fees flat compared to May. While input costs for things like chemicals, metals, and plastics are still rising, the overall rate of inflation hit a four-month low.
Job seekers are feeling the pinch too. Hiring slowed to its weakest pace of the year. A staggering 97% of companies kept their payrolls exactly the same, claiming they have more than enough staff to handle the current workload. Unsurprisingly, this mix of weak demand and shaky market conditions pushed business confidence down to a five-month low. The party might not be over, but the music is definitely fading.
