India’s private sector activity surged to its highest level in over a year in June 2025, signaling a strong and broad-based economic momentum driven by solid demand, record export orders, and continued job creation across industries.
According to the latest HSBC Flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, the index rose to 61.0 in June, up from 59.3 in May. This marks the highest reading in 14 months and reflects sustained growth in both manufacturing and services sectors.
The manufacturing PMI climbed to 58.4, while the services PMI reached 60.7. These figures indicate nearly four years of uninterrupted expansion, highlighting the resilience of India’s economy amid global headwinds.
Manufacturing Drives Export Boom
A standout feature of June’s performance was the record increase in export orders. The manufacturing sector experienced its strongest inflow of new export orders since comparable data began in 2014. This export-led growth significantly contributed to the uptick in overall business output.
The buoyant demand also translated into increased factory activity, with Indian manufacturers ramping up production to meet both domestic and international orders. This export strength is a key factor underpinning India’s growing trade performance in 2025.
Jobs and Hiring Reach New Highs
The survey revealed that employment generation accelerated, especially in manufacturing, where job creation hit its fastest pace in nearly two decades. Service sector firms also continued hiring at a healthy rate, suggesting rising business confidence in medium-term demand.
The robust labor market is seen as a sign of strong corporate health and expectations of continued order inflow.
Easing Price Pressures
Inflationary concerns also appeared to moderate. Input cost inflation — the prices businesses pay for raw materials — dropped to a 10-month low, giving companies room to manage operational costs more efficiently.
Correspondingly, output prices — the prices charged to customers — also eased from May’s elevated levels. This moderation in pricing is expected to offer relief to consumers and may reinforce the Reserve Bank of India’s (RBI) stance on keeping inflation within target.
Business Sentiment Cautious Despite Growth
Despite the strong performance metrics, the report noted that business confidence dipped to its lowest level in more than two years, particularly in the services sector. Analysts attribute this caution to concerns over geopolitical instability, input volatility, and uncertain global demand.
This divergence between current output strength and forward-looking sentiment highlights the complexity of the post-pandemic global economic environment.
Implications for Monetary Policy
The strong PMI data, combined with easing inflation, may influence the RBI’s future interest rate decisions. With inflation largely under control and economic activity robust, some analysts anticipate that the central bank may consider rate cuts to sustain momentum, especially if external risks intensify.
