India's June manufacturing PMI falls to 54.2, growth slows

India's manufacturing sector expanded in June but at its second-slowest pace in four years, according to a private survey released on Wednesday. The HSBC India Manufacturing Purchasing Managers' Index (PMI) fell to 54.2 from 55.0 in May, indicating continued growth but a notable moderation in momentum.

The slowdown was broad-based, affecting output, new orders, export orders, and employment. New orders, a key demand indicator, rose at their second-weakest rate since June 2022. International sales grew at the weakest pace in 39 months, with survey respondents citing subdued demand from some European markets.

Pranjul Bhandari, chief India economist at HSBC, said the moderation suggests demand has cooled slightly after an earlier surge linked to geopolitical tensions. Growth slowed across output, new orders, export orders and employment, while both the input and output price indices declined, pointing to softer inflationary pressures as geopolitical disruptions begin receding, Bhandari said.

On the production front, output expanded at its second-slowest rate since mid-2022. The survey noted that capital goods were a particular drag on the pace of expansion. With demand growth...