India's PMI manufacturing index softens to 57.8 in June from 58.7 in May

India's manufacturing industry expanded at the second-fastest rate this year in June, albeit at a slightly slower pace than in May, supported by robust demand despite higher inflationary pressures, data showed Monday. The S&P Global Manufacturing Purchasing Managers' Index fell to 57.8 in June from May's 58.7.

That marked two years of the index being above the 50-mark separating expansion from contraction.

Companies ramped up production to meet the rising sales in June. The expansion in output was sharp and among the fastest over the past year-and-a-half, the release said.

"June's PMI results again showed robust demand for Indian-made products, both in the domestic and international markets," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence said. "Positive client interest continued to support the manufacturing industry, driving growth of output, employment, quantities of purchases and input stocks."


New orders and output rose sharply despite the sub-indexes easing moderately from May, driven by both domestic and international demand. Foreign demand grew for the 15th straight month.

Underlying solid demand also stoked business confidence and optimism around future business activity rose to its highest this year. That also prompted firms to increase their workforce for a third consecutive month. However, while the employment index was the second-highest since November the rate of expansion was moderate.

Higher prices for labour and some raw materials led to increased input costs in June but the rate of inflation was only minutely higher from May and below the long-run average.

Companies passed on expenses to clients and the output prices index was at a 13-month high.

"Presented with buoyant demand, manufacturers seized the opportunity to adjust their pricing strategies. The latest increase in output charges reflected firms' ability to pass on higher cost burdens to customers while maintaining a competitive edge," added De Lima.

Demand strength, new client enquiries and marketing efforts underpinned optimistic forecasts towards growth prospects. Moreover, the overall level of business confidence rose to a six-month high, the release showed.