India’s Private Sector Growth Cools in June as Demand and Hiring Moderate

India’s private sector activity lost some momentum in June, with softer demand and slower job creation weighing on overall growth, according to the HSBC Flash India Purchasing Managers’ Index released on Tuesday.

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The HSBC Flash India Composite PMI Output Index slipped to 57.4 in June from 59.3 in May, marking the lowest reading since March. A reading above 50 indicates expansion. The latest data pointed to continued growth in both manufacturing and services, albeit at a slower pace.

Commenting on the survey, Pranjul Bhandari, Chief India Economist at HSBC, said private sector activity eased in June as inventory accumulation in manufacturing moderated after several months of strong growth. She noted that export demand remained resilient and input costs across sectors increased at the slowest pace in five months.

Manufacturing and Services See Slower Growth

According to S&P Global, manufacturing output growth eased to 57.4 from 58.0 in May, while the services business activity index declined to 57.3 from 59.8. The headline manufacturing PMI fell to 54.5, a three-month low.

New business continued to expand, though at a slower rate than in previous months. Companies across sectors cited competitive pressures, higher fuel costs and shortages of gas as factors affecting demand and production. S&P Global said softer demand and cost pressures limited the pace of output growth.

International orders presented a mixed picture. Firms operating in services reported higher levels of foreign business expansion than those in manufacturing, which experienced the lowest level of export order expansion since March 2023. The overall export demand was still positive but at its weakest in 21 months.

Weak Employment Expansion

There was employment expansion in June, albeit the slowest of the past six months. Recruitment by manufacturing firms and services organizations was the slowest since December 2025.

According to survey responses, the amount of backlogs was relatively unchanged, implying that the current workforce was sufficient to cope with current demands.

Cost Inflation Weakens Even More

The private sector firms were experiencing increasing input costs in chemical sectors, fuel, food products, gas, metals, and utilities. However, cost inflation decreased for the third month in a row and fell to its lowest level since January.

Also, companies were raising prices more slowly. Many firms refrained from passing on higher costs aggressively because of intense competition and weaker demand conditions.

Confidence Softens

Businesses remained optimistic about output growth over the next year, but sentiment weakened further. Overall confidence fell to its lowest level since January and stayed below the long-term average.

Among manufacturers, optimism dropped to its weakest level in nearly four years. Purchasing activity also slowed, leading to softer inventory accumulation and a decline in finished goods stocks during the month.