PMI Soars & Services Surge: India’s Economic Boom in FY25 Unveiled

India's manufacturing PMI hit a record high in June 2024, driven by strong demand and historic hiring. Concurrently, the Eight Core Industries Index saw significant growth due to activity in coal, natural gas, and electricity. Services sector witnessed robust international sales, marking India’s global leadership in digital payments.

According to an SBI report, the manufacturing Purchasing Managers' Index (PMI) soared in June 2024, driven by robust demand and the highest hiring activity in 19 years. Concurrently, the Eight Core Industries Index expanded by 6.5 percent year-on-year in the first two months of FY25, primarily buoyed by increased activity in essential sectors such as coal, natural gas, and electricity.

However, segments like fertilizers and cement faced degrowth due to base effects. Steel demand surged with double-digit growth year-on-year, supported by robust demand from sectors like real estate, where home construction across major cities hit an 11-year high in early calendar year 2024.

This surge in domestic demand has bolstered steel production, contributing to overall industrial expansion. Meanwhile, auto sales faced a slowdown due to adverse weather conditions and base effects, despite attractive discounts offered by Original Equipment Manufacturers (OEMs). The Federation of Automobile Dealers Associations (FADA) advised OEMs to adopt prudent inventory management practices to address rising stock levels.

In the services sector, activity continued to set new records, underscoring India's global leadership in digital payments. International services sales experienced robust growth, supported by strong domestic demand and low inflationary pressures. Annual sales growth for IT and non-IT services in private non-financial companies outpaced manufacturers, growing by 5.5 percent and 7.9 percent year-on-year respectively in FY24.

Power consumption surged by 9 percent year-on-year in June 2024, reaching 152.4 billion units (BU) due to prolonged heat waves and increased industrial activity. Peak demand soared to 245.4 gigawatts (GW), indicating heightened usage of cooling appliances during peak hours. Unified Payments Interface (UPI) transactions hovered around the Rs. 20 trillion mark in terms of value in June 2024, highlighting India's strong digital payment ecosystem and its widespread adoption across various sectors.

The symbiotic relationship between the manufacturing and services sectors is poised to further strengthen India's economic resilience and growth trajectory in the coming months, bolstered by strategic sectoral alignments and robust domestic demand dynamics.

(With inputs from agencies.)