India’s Business Activity Hits a 14-Month High - Here’s What’s Driving It

India’s private-sector business activity just hit a 14-month high in June. The country’s Composite PMI, a key early indicator of economic performance, climbed to 61.0. That’s the strongest growth since April 2024 and shows strong momentum in both manufacturing and services.

The HSBC Flash India Composite PMI, put together by S&P Global, jumped from May’s revised 59.3 to 61.0 in June. Since anything above 50 signals growth, this marks nearly four straight years, 47 months, of expansion.

The Flash Manufacturing PMI rose to 58.4 in June, up from 57.6 in May. That’s the best number since April 2024. Services Aren’t Far Behind: The Services PMI hit a 10-month high of 60.7, climbing from around 58.8. Both sectors are clearly firing on all cylinders.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Why the Boom?

• Record-Breaking Export Orders: June saw the biggest spike in new export orders since records began in 2014. Strong global demand is clearly lifting the whole private sector.
• Robust Domestic Demand: Home-grown orders are up, too. Businesses are reporting stronger demand, better efficiency, and more investment in tech, all leading to increased output.
• Hiring on the Rise: With orders piling up, companies are staffing up. Manufacturing employment hit an all-time high, and service-sector hiring stayed solid.
• Cost Pressures Easing: Prices are still rising, but more slowly. Input-cost inflation dropped to a 10-month low, giving companies some breathing room on pricing without squeezing their margins too hard.

What the Experts Are Saying

Pranjul Bhandari, chief India economist at HSBC, noted: “Strong global demand and growing backlogs are pushing manufacturers to hire more and keep production levels high.” Still, there’s a hint of caution: while overall optimism is up, business confidence in the service sector dipped to a two-year low.

Not everything is smooth sailing. Global tensions, especially in the Middle East, and the U.S.-Iran situation have driven up oil prices by about 13% since June started. That could push up input costs and disrupt supply chains if things get worse.

The Bigger Picture: Momentum Carries Over from May

This isn’t a one-off jump. May already showed strong momentum, with a PMI of 61.2, the highest in 13 months. Hiring was also the strongest since this kind of data started being tracked in 2005.

What This Means for India’s Economy

• GDP Growth Looks Strong: If this private-sector strength continues, it’s going to boost overall GDP as India moves into its new fiscal year.
• RBI Might Stay Supportive: With inflation cooling and output strong, the Reserve Bank of India may not feel the need to hike interest rates, and might even consider cutting them slightly.
• Manufacturing Has Room to Grow: Thanks to global demand and tech investments at home, manufacturing could keep gaining momentum.
• Cautious Optimism Is Key: Even with all this growth, rising oil prices and service-sector hesitation show that risks are still out there.

Looking Ahead: What to Watch

The final numbers for June will come out soon, manufacturing on July 1, and services plus the composite index on July 3. Going forward, energy market stability will be critical. And how inflation behaves will likely shape what the RBI does next.

June was a big win for India’s economy. Exports are booming, hiring is up, and costs are manageable. But don’t ignore the warning signs, oil prices, geopolitical tensions, and softening confidence in services are reminders that staying on this growth path won’t be automatic. The next few months will be key in determining how sustainable this momentum really is.