Manufacturing activity remains in expansion mode, June PMI at 54.2

India's manufacturing PMI stood at 54.2 in June, signalling continued expansion in the sector, according to the HSBC Flash India PMI data released on Wednesday.

The seasonally adjusted PMI remained comfortably above the 50-mark that separates expansion from contraction, indicating a sustained improvement in operating conditions across the manufacturing sector.

According to the data, the HSBC India Manufacturing Purchasing Managers' Index (PMI) came at 54.2, although the pace of growth moderated from the previous month.

According to the PMI data, growth in new orders and output slowed during the month. While several manufacturers reported an improvement in demand, others cited subdued client appetite and market competition.

Meanwhile, export demand also remained positive during the month, although the pace of growth moderated.

Pranjul Bhandari, Chief India Economist at HSBC, said the June PMI signalled continued expansion in manufacturing activity.

"The moderation suggests demand has cooled slightly after the earlier surge linked to the Middle East conflict. Growth slowed across output, new orders, export orders and employment, while both the input and output price indices declined, pointing to softer inflationary pressures as geopolitical disruptions begin receding," she said.

The PMI data further showed that input cost and output price inflation eased during the month.

Purchasing activity also moderated, resulting in a slower build-up of input inventories, while finished goods inventories declined as firms aligned production with current demand.

However, employment continued to rise in June, albeit at a slower pace, it added.

Earlier in June, HSBC Flash PMI data showed that India's private sector activity eased slightly amid geopolitical tensions, even as overall new orders continued to expand strongly.

Manufacturing output growth softened as inventory-building lost momentum after several months of robust expansion, while demand for Indian goods and services grew at a slower pace, resulting in a more moderate increase in output and employment.