India’s manufacturing sector experienced robust growth in June 2025, reaching a 14-month high, primarily driven by a surge in international sales that significantly boosted factory output and led to record-breaking hiring.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 58.4 in June from 57.6 in May, marking the fastest pace of expansion since April of the previous year. A PMI reading above 50 indicates growth in activity.

Key drivers of this growth included:

Substantial Increase In Export Orders: Export demand, especially from the US, was cited as a major factor, with export orders recording the third-highest growth rate since data collection began in March 2005.

Strong Domestic And International Demand: Led to the steepest rise in new orders in nearly a year, fuelling expansions in output and prompting manufacturers to increase hiring at an unprecedented rate—the fastest since the survey’s inception over two decades ago.

Record-Breaking Hiring: To meet the surge in demand, manufacturers hired additional staff at a record pace, with most companies reporting short-term recruitment.

Inventory Adjustments And Input Buying: Manufacturers increased input purchases to the greatest extent in 14 months, supporting further expansion in stocks of purchases, while the stock of finished goods continued to shrink as firms tapped into inventories to meet demand.

Easing Price Pressures: Input cost inflation moderated to its lowest level in four months, despite some increases in iron and steel prices. However, companies continued to raise selling prices, though at a softer pace than in the previous month, passing on costs such as freight, labour, and materials to customers.

Business Confidence: While overall sentiment remained positive, it dipped slightly to an eight-month low, with some manufacturers expressing concerns about competition, inflation, and potential changes in consumer preferences.

This strong performance comes amid rising uncertainty due to ongoing trade negotiations with the US, particularly over tariffs on auto components, steel, and agricultural goods, which remain unresolved ahead of a critical July 9 deadline.

India’s manufacturing sector is experiencing a period of exceptional momentum, powered by export growth and strong demand, leading to record employment gains and solidifying its expansion despite external trade uncertainties.

Based On A Reuters Report