India’s manufacturing industry expanded at the second-fastest rate this year in June, supported by robust demand despite higher inflationary pressures, according to a private survey. The Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, was 57.8 in June, slightly lower than May but still above expectations. This marks two years of expansion in the manufacturing sector. New orders and output rose sharply, driven by strong domestic and international demand. Foreign demand grew for the 15th straight month. Business confidence and optimism around future activity also increased, leading firms to increase their workforces for a third consecutive month. However, the rate of expansion in employment was moderate. The survey also noted that higher prices for labor and some raw materials led to increased input costs in June, but inflation remains within the Reserve Bank of India’s comfort zone. Companies passed on expenses to clients, resulting in the output prices index reaching a 13-month high. The survey indicated that manufacturers were able to adjust their pricing strategies in response to buoyant demand. Despite the expansion in the manufacturing industry, the central bank of India has left the door open for future interest rate hikes, highlighting the need for cautious monetary policy. The Reserve Bank of India has raised rates by 250 basis points since May 2022 but has kept the repo rate steady at 6.50% since April. It is expected to remain unchanged until next year.