Image used for representational purpose.
| Photo Credit: Reuters

Business activity in India expanded at a faster clip this month from May thanks to gains in manufacturing and services, according to a business survey that also showed the pace of job creation was at its strongest in over 18 years.

Robust gains in both sectors at the end of the first fiscal quarter meant a strong start to India’s economy this financial year after it expanded by 8.2% last year – the fastest expansion among major countries – partly led by buoyant manufacturing.

HSBC’s flash India Composite Purchasing Managers’ Index , compiled by S&P Global, rose to 60.9 in June from last month’s final reading of 60.5.

That marked nearly three years above the 50-level separating growth from contraction on a monthly basis.

“The composite flash PMI ticked up in June, supported by rises in both the manufacturing and service sectors, with the former recording a faster pace of growth,” noted Maitreyi Das, global economist at HSBC.

The manufacturing index showed bigger gains to 58.5 from 57.5 in May while the dominant services industry’s reading rose slightly to 60.4 this month from 60.2, adding to the continued expansion in India even as the global economy slows.

That was backed by a strong expansion in both manufacturing output and orders as well as business gains among services firms.

New export orders expanded for a 22nd consecutive month in June and remained robust, though the pace eased slightly after record growth last month.

Robust demand prompted companies to hire more people, with overall employment generation rising at the fastest pace since April 2006. Job creation among manufacturers was higher than in the services sector.

Boosting jobs will remain the biggest challenge for the Narendra Modi government which got elected for a rare third term earlier this month, a Reuters poll showed.

Meanwhile, price increases at firms have eased since May, boding well for the outlook on retail inflation. Rises in services input costs eased to a four-month low, while the pace of increases in prices charged to clients was broadly unchanged.

“Input cost inflation eased slightly in June, but remained elevated with panellists citing increases in labour and material costs. The output price index suggests manufacturing firms were able to pass on higher costs to customers,” added Ms. Das.

“Optimism about future output weakened in June, but remained above the historical average.”

Even though business optimism weakened to a three-month low, the outlook for the coming year remained positive as companies expect output gains based on proposals in the pipeline, efficiency gains and forecasts for favourable exchange rates.

Kishore Jayaraman, president of Rolls-Royce, India and South Asia, spoke at a session on “Smart Manufacturing” organised by TexasVentures and CODISSIA in Coimbatore city on Friday June 7, 2024.
| Photo Credit: PERIASAMY M

Creation of jobs is key for advancement of the country, said Kishore Jayaraman, president of Rolls-Royce, India and South Asia, in Coimbatore city on Friday.

Speaking at the Global Manufacturing Cluster Vision 2030 conference on Smart Manufacturing, organised by Texas Ventures and CODISSIA as a part of the Intec 2024 industrial fair, Mr. Jayaraman said India has the brainpower and skills. Jobs should be created for these skilled people. The Micro, Small and Medium-scale Enterprises (MSMEs) need to scale up and generate jobs. Industries scaling up capacities is vital for India and job creation is key to advancement. The MSMEs are significant players to generate jobs.

Most of the western world wants to come to India to set up manufacturing capacities because of the skill capability available in the country. Significant number of jobs will be generated when a number of factories grow at the same time, he added.

Mr. Jayaraman pointed out that Coimbatore has some of the well-known large-scale companies that are present here for decades, over two lakh MSMEs, more than 75 engineering colleges, and ₹1.25 lakh crores worth manufacturing annually with ₹45,000 crores worth exports. It has engineering capability, skills, and the ability to scale up. But, it should also be able to talk loudly about its successes, he added.

K. Balasubramanian, chairman of Precision Group of Companies, spoke about the need for inventory management in companies. Sathiya Seelan, vice president – design styling of Ashok Leyland, highlighted the need for particularizing for a stable economy.

Subathra Mylsamy, partner of AK Mylsamy & Associates, and M. Thirumalai Kumar, head of Research Group, Autonomous Systems & Control – India, were the other speakers.