India's economic activity hits 14-month high in June on strong PMI

India’s economic activity surged in June 2025, as Indian companies scaled up output in response to faster increases in total new business intakes and international sales, as per the latest HSBC’s flash Purchasing Managers’ Index (PMI) Survey released on Monday.

The upturn in export orders was the strongest in June since comparable data became available in September 2014. With pending workloads continuing to accumulate, firms remained in hiring mode. Meanwhile, charge inflation softened as input costs rose at the slowest pace in 10 months.

Pranjul Bhandari, Chief India Economist at HSBC, said: "India’s flash PMI indicated strong growth in June. New export orders continued to fuel private sector business activity, especially in manufacturing. Meanwhile, the combination of robust global demand and rising backlogs prompted manufacturers to increase hiring. Employment growth is also healthy in the services sector despite slightly weakening on a sequential basis from May to June. Finally, input and output prices continued to rise for both manufacturing and services firms, but rates of increase showed signs of softening."

The HSBC Flash India Composite Output Index, a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors, climbed to a 14-month high of 61.0 in June. Rising from 59.3 in May, the latest reading was consistent with a sharp rate of expansion that was well above the long-run series average. Manufacturers led the upturn in business activity, though growth also picked up pace in the service economy. Rates of increase were at two- and ten-month highs, respectively. According to panellists, output was boosted by favourable demand trends, efficiency gains and tech investment.

The HSBC Flash India Manufacturing PMI – a weighted average of the New Orders, Output, Employment, Suppliers’ Delivery Times and Stocks of Purchases indices – rose from 57.6 in May to 58.4 in June, signalling the best improvement in operating conditions since April 2024. New business placed with goods producers and service providers increased at the end of the first fiscal quarter, with the faster upturn among the former. At the composite level, the rate of expansion was the strongest seen since July 2024. When explaining June's rise, survey participants remarked on healthy demand conditions and successful marketing.

Indian companies remained strongly upbeat about the year-ahead outlook for business activity, according to the survey. "The overall level of positive sentiment slipped to its lowest in just over two years, but was broadly aligned with its trend."

At the sector level, there was a mild improvement in confidence at manufacturers and a downgrade in expectations at service providers. HSBC Flash India Services PMI Business Activity Index stood at 60.7, up from 58.8 in May, while HSBC Flash India Manufacturing PMI Output Index was recorded at 61.5, up from 60.3 in May. HSBC Flash India Manufacturing PMI came in at 58.4, higher than 57.6 in May.