India’s Manufacturing PMI Falls To 54.2 In June Amid Softer Demand

India’s manufacturing sector continued to expand in June, although growth moderated compared to the previous month. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) declined to 54.2 in June from 55.0 in May.

The latest reading pointed to softer demand conditions across domestic and international markets. Despite the slowdown, the PMI remained comfortably above the 50 mark, indicating ongoing expansion in manufacturing activity.

HSBC India Manufacturing PMI Slows in June 2026

The HSBC India Manufacturing PMI fell to 54.2 in June from 55.0 in May. This represented the second-weakest improvement in manufacturing operating conditions since mid-2022.

A PMI reading above 50 signals expansion, while a reading below 50 indicates contraction. Although the pace of growth moderated, the sector continued to record healthy overall business conditions during the month.

Manufacturing Output and New Orders Growth Weakens

According to the survey, growth in output and new orders slowed significantly during June. Both indicators expanded at their weakest pace in 4 years, excluding the reading recorded in March.

Manufacturers attributed the slowdown to subdued customer demand and heightened market competition. Weaker order inflows affected production growth, resulting in a softer pace of expansion across the sector.

Export Demand and International Sales See Slower Growth

Export performance also weakened during the month, reflecting softer demand from overseas markets. International sales increased at the slowest rate since March 2023.

Survey participants highlighted weaker demand from certain European markets as a key reason for the slowdown. The moderation in export orders contributed to the overall easing in manufacturing growth during June.

Input Costs, Employment and Business Confidence Trends

The survey indicated that input cost inflation eased to its slowest pace since February. Lower cost pressures provided some relief to manufacturers, even as demand conditions softened.

Employment growth weakened to its lowest level of 2026, suggesting a more cautious approach to hiring. Business confidence also fell to a 5-month low as companies expressed concerns about demand conditions and competitive pressures.

Read More: HSBC India Services PMI Falls To 57.3 In June 2026 Amid Slower Demand.

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Conclusion

India’s manufacturing sector remained in expansion territory in June, with the PMI staying above the 50 threshold. However, growth moderated as domestic demand, export orders and production activity expanded at a slower pace.

The survey also pointed to softer hiring activity and lower business optimism compared to recent months. Despite these challenges, the sector continued to show resilience and maintained overall positive operating conditions during the month.

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