India Flash Composite PMI slows to three-month low of 57.4 in June

India’s HSBC Flash India Composite Purchasing Managers’ Index fell to a three-month low of 57.4 in June from 59.3 a month earlier, primarily due to a sharp slowdown in services activity.

Overall, new order volumes continued to rise in June, although the pace of expansion slowed to the weakest in three months. Growth eased at both manufacturing firms and service providers, as some businesses struggled to secure new work, S&P Global, which compiles the data, said.

The HSBC Flash India Manufacturing PMI slipped to a three-month low of 54.5 in June, down from 55.0 in May.

Goods manufacturers’ buying activity rose at the weakest pace in two-and-a-half years in June. As a result, there was a softer increase in purchases and an outright decline in finished-product inventories.

"Private sector activity eased a bit in June. Growth of manufacturing output softened a tad as inventory-building lost steam after a few hectic months,” Pranjul Bhandari, chief India economist at HSBC, said.

Meanwhile, HSBC Flash India Services PMI fell to a 17-month low of 57.3 in June from 59.8 a month earlier.

The latest flash PMI figures also showed receding inflationary pressures.

Private sector companies continued to report month-on-month increases in their expenses, which they often attributed to higher raw material prices. That said, the overall rate of inflation eased for the third successive month to its lowest since January.

Cost pressures remained more pronounced in manufacturing than in services. Although Indian goods producers raised their selling prices to a greater extent than their service counterparts, inflation rates softened in both cases. At the composite level, overall charge inflation eased to its weakest level in six months.

Flash PMI readings have generally tended to overshoot final estimates in recent months.