India's factory activity surges in June, hiring hits 19-year peak

But there's an increase in operating expenses.

India's manufacturing activity rose in June, buoyed by increasing consumer demand.

This led to the country's fastest hiring rate in 19 years, according to HSBC India's global economist Maitreyi Das.

HSBC India Manufacturing Purchasing Managers' Index (PMI) rose by 0.8 percentage points from 57.5 in May to 58.3 in June. A PMI above 50 means expansion whilst a score below 50 suggests contraction.

According to the June data, a strong expansion in sales among Indian manufacturers was mainly credited to strong underlying demand, increased export volumes and effective advertising campaigns.

Eventually, this led to a record-breaking surge in employment.

For the said month, input buying activity also grew.

Meanwhile, staff expenses have increased in June coupled with rising material and transportation costs, leading to an overall increase in operating expenses.

But Das noted that the manufacturers were able to pass on higher costs to customers given the strong demand leading to improved margins.

New export orders saw a significant increase in June as firms attributed the higher inflows of new work from overseas to improved demand from Asia, Australia, Brazil, Canada, Europe, and the US.

There's also optimism in the manufacturing sector, with nearly 29% of panellists expecting output growth in the coming year.

More improvements in demand and order book volumes are projected by companies, with advertising and increased client enquiries also contributing to the positive sentiment.