"Firms indicated that product quality improvement combined with stronger demand contributed to higher levels of new orders. As a consequence, output expanded again in June, extending the current expansionary period to three years and three months. New export orders increased moderately at manufacturing firms," a press release from HSBC Purchasing Managers' Index states.

Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:

"Activity in the manufacturing sector kept up the pace in June with output, and employment expanding at a faster pace. The latter helped slow the pace of growth in backlogs of work.

New order growth decelerated slightly led by export orders while stock levels rose, suggesting a slight moderation in output growth going ahead. Input and output prices rose at a faster pace than in May, keeping inflation high by historical standards. In light of these numbers, the RBI does not have a strong case for further rate cuts, which could add to lingering inflation risks."

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