Our Bureau
New Delhi
India’s manufacturing sector surged to a three-month high in May, with activity growth accelerating to its strongest pace since February, driven by robust domestic demand and infrastructure spending.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) climbed to 55.0 in May, up from April’s 54.7 reading. Any figure above 50 indicates expansion, and the May reading marks the sector’s healthiest improvement in three months.
Strong domestic markets fueled the uptick, with new business orders rising noticeably. Infrastructure projects and heightened local demand lifted output levels across the sector. However, manufacturers faced persistent inflationary pressures, as input costs for energy, fuel, metals, and transportation remained elevated.
Despite cost pressures, companies continued hiring, though the pace of employment growth softened slightly compared to April. Firms also increased purchasing activity and built up inventories to meet anticipated demand.
Export demand weakened slightly, with international sales recording slower growth due to competitive pressures and geopolitical tensions, including the ongoing conflict in the Middle East. Nonetheless, domestic strength more than compensated for softer external demand.
The composite PMI, which tracks both manufacturing and services, stood at 58.1 in May, nearly unchanged from April’s 58.2, signaling broad-based economic expansion.
Economists view the manufacturing PMI recovery as a positive signal for India’s broader economic trajectory. The sector’s resilience amid inflationary pressures suggests that domestic consumption and public infrastructure investment remain key growth engines.
As global uncertainty persists, India’s manufacturing sector continues to demonstrate adaptability, with local demand acting as a stabilizing force against external headwinds.
