According to the HSBC survey, the final manufacturing, services and composite purchasing managers’ index (PMI) figure rose 0.4 percentage points to 60.9 in June, compared with a revised figure of 60.5 in May.
According to a survey, business activity in the country became stronger in June due to growth in manufacturing and services sectors and the pace of job creation became the fastest in 18 years.
“The composite output index expansion further in June, supported by an grow in new orders, which led companies to rise hiring in both sectors. Input prices softened slightly in June, resulting in margin improvement, especially for manufacturing companies,” the survey said.
It said that while strong demand conditions are keeping business activity high, the outlook for future activity has deteriorated sharply.
Manufacturers and service providers combined saw their production increase. The HSBC survey said the biggest stimulus of the two came from manufacturers. HSBC global economist Maitreyi Das said the composite flash PMI rose in June, supported by growth in both the manufacturing and services sectors, with the former recording a faster pace of growth.
It said new orders increased by about one percent, mainly due to domestic orders. Mirroring the trend in production, new orders for manufacturers grew at a faster pace than for service providers. “Meanwhile, new export orders declined in June but remained well above their historical average. In terms of international demand, service-related companies outperformed manufacturers.“Panelists noted widespread benefits from Africa, Asia, Australia, the Americas, Europe and the Middle East,” it said.
The increasing demand resulted in pressure on capacity. As a result, both manufacturing and service firms increased their staff levels and input purchasing activity. In fact, the pace of job creation was the fastest in 18 years, the survey said.
The PMI survey said the good news is that input cost inflation eased in June and fell below the long-term average. Both manufacturers and service providers saw a reduction in input price pressure.However, overall price levels remain high, with survey respondents citing higher labor and material costs, particularly for food, steel and electronics. It said output prices softened slightly along the gap between the manufacturing and services sectors: the former saw output prices rise, while the latter saw softening.
“Corporate margins improved in June. Margins in both manufacturing and services sectors saw improvement due to lower input costs. However, manufacturing companies were able to pass on a part of their input costs to customers, resulting in higher corporate margins,” it said.
“However, we should be a little cautious as the future output index has fallen sharply. The overall degree of optimism weakened to a three-month low, but the series remained above average. Private sector companies believe marketing efforts are likely to help maintain demand momentum,” the HSBC survey said.