India's private sector activity touches 14-month high: What's the reason?
What's the story
The private sector business activity in India has registered a major jump in June, hitting a 14-month high. The surge is attributed to strong domestic and international demand, record export growth, as well as robust hiring. The HSBC Flash India Composite Purchasing Managers's Index (PMI) rose to 61.0 this month from May's 59.3.
Sector performance
Services, manufacturing sectors drive PMI increase
The PMI increase was largely driven by the services and manufacturing sectors. The activity index for services rose to 60.7 from May's 58.8, its highest since August last year. Meanwhile, the manufacturing PMI jumped to 58.4 in June from 57.6 in May, thanks to strong output levels and new export orders that fueled business activity across sectors, particularly in manufacturing.
Growth factors
Record export growth, robust hiring boost business activity
The PMI data also highlights record export growth and robust hiring as key contributors to the rise in business activity. Overall, new export orders hit a record high since data collection began in September 2014. This surge in demand led manufacturers to ramp up hiring, with employment growth in manufacturing hitting its highest level since the series started over two decades ago.
Inflation impact
Overall price pressures ease slightly
The PMI data shows that overall price pressures have slightly eased, with input cost inflation easing to a 10-month low. This has enabled companies to limit price hikes and remain competitive. The development comes after data showed inflation eased to an over six-year low last month, allowing the Reserve Bank of India (RBI) to focus on supporting economic growth amid rising uncertainty from US trade tariffs.