India’s manufacturing sector experienced a slight slowdown in May, as indicated by the HSBC India Manufacturing PMI, which slipped to 57.6, down from 58.2 in April. This figure, released by S&P Global, shows the weakest improvement since February but remains significantly above the neutral 50.0 mark, suggesting continued expansion.
While overall business conditions improved, the growth rates of new orders and output decelerated to a three-month low. Nonetheless, these growth rates are still above their long-run averages, driven by robust domestic and international demand. Reports attribute continued sales increases to successful marketing strategies despite challenges from competition, rising costs, and geopolitical tensions with Pakistan.
New export orders surged, with demand strong from regions such as Asia, Europe, the Middle East, and the US. This increase in demand led companies to boost input purchases and expand their workforce, achieving record job creation in May. Yet, cost pressures mounted as prices for raw materials and logistics escalated, pushing selling prices to historic highs.
Despite these pressures, supply chain conditions showed improvement, with the fastest delivery times in months, aiding in inventory accumulation even as finished goods stocks fell. Looking forward, Indian manufacturers remain optimistic, anticipating output growth supported by marketing and customer enquiries, according to HSBC insights.
