India private sector growth slows to three-month low in June

India’s private sector kept expanding in June, but the pace of growth cooled to a three-month low as demand softened across factories and services. The HSBC flash India Composite Purchasing Managers’ Index fell to 57.4 from 59.3 in May, a clear step down from the strong spring run. Any reading above 50 still signals expansion, so the economy remained resilient, but the details pointed to less vigorous momentum.

The slowdown was broad-based. Services activity eased to a 17-month low of 57.3, while manufacturing slipped to 54.5, also a three-month low. Overall new orders rose at their slowest pace since March, a warning sign that the surge in business seen earlier in the year was losing some of its force. Export demand was uneven: services firms reported slightly stronger international sales, but manufacturers posted their weakest rise in new export orders since March 2023.

Employment added to the picture of cooling momentum. Hiring at both factories and service providers was the weakest in the current six-month stretch of expansion and the softest since December. That suggests firms were becoming more cautious as they faced slower demand and a less certain outlook. For an economy that has been one of the fastest-growing among major peers, a weaker hiring trend matters because it can feed into slower income growth and, eventually, softer consumer spending.

Price pressures eased as well. Input cost inflation slowed for a third straight month and fell to its lowest level since January. Selling price inflation also moderated as companies found it harder to pass on higher costs amid weaker demand, a sign that pricing power is cooling. Business confidence slipped below its long-run average, and sentiment among goods producers fell to its weakest level in nearly four years, underscoring how cautious managers have become about the next few months.

The June survey was collected from June 11 to June 20, and the flash release was scheduled for 05:00 UTC on June 23. It followed a period of still-strong but uneven growth, including a March reading of 56.5, the weakest expansion since October 2022. The latest data suggest India is still growing at a solid pace, but if new orders, hiring and confidence keep easing, the economy could enter the second half of the year with less of the broad-based momentum that has helped it stand out globally.