New Delhi: India's manufacturing activity slipped to a three-month low in May with inflation and India-Pakistan conflict impacting growth in output and new orders even as they remained well above long-run average, according to a private survey released on Monday.
The HSBC Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April.
"India's May manufacturing PMI signalled another month of robust growth in the sector, although the rate of expansion in output and new orders eased from the previous month," said Pranjul Bhandari, India chief economist at HSBC.
Healthy domestic and international demand, along with marketing efforts, led to growth, according to survey respondents.
International demand remained strong last month, with new export orders growing at the strongest rate in three years. Panellists noted favourable demand from Asia, Europe, the Middle East, and the US. This also led to an increase in employment, with the rate of job creation reaching a record high.
According to the survey, 12% of panellists reported higher headcounts last month, and "the creation of permanent job roles featured more prominently than that of short-term positions."
PMI-a widely used indicator of business conditions-is a weighted average of five indices derived from questionnaires sent to purchasing executives in companies: new orders, output, employment, suppliers' delivery times, and stocks of purchases. A reading above 50 indicates expansion. India's PMI was 57.5 in May 2024.
Manufacturing companies observed a rise in input costs last month, with aluminium, cement, iron, leather, rubber and sand cited as the main drivers of cost pressures. Overall, the rate of inflation last month was the highest since November 2024.
Apart from material costs, freight and labour also reported an increase.
Due to an increase in operating expenses supported by strong demand, selling prices also rose in May.
" Input cost inflation is picking up, but manufacturers seem to be able to lessen the pressure on profit margins by raising output prices," Bhandari said.
Supply chain performance improved in May, "as average lead times shortened to the greatest extent in four months," the survey mentioned.
The HSBC Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April.
"India's May manufacturing PMI signalled another month of robust growth in the sector, although the rate of expansion in output and new orders eased from the previous month," said Pranjul Bhandari, India chief economist at HSBC.
Healthy domestic and international demand, along with marketing efforts, led to growth, according to survey respondents.
International demand remained strong last month, with new export orders growing at the strongest rate in three years. Panellists noted favourable demand from Asia, Europe, the Middle East, and the US. This also led to an increase in employment, with the rate of job creation reaching a record high.
According to the survey, 12% of panellists reported higher headcounts last month, and "the creation of permanent job roles featured more prominently than that of short-term positions."
PMI-a widely used indicator of business conditions-is a weighted average of five indices derived from questionnaires sent to purchasing executives in companies: new orders, output, employment, suppliers' delivery times, and stocks of purchases. A reading above 50 indicates expansion. India's PMI was 57.5 in May 2024.
Manufacturing companies observed a rise in input costs last month, with aluminium, cement, iron, leather, rubber and sand cited as the main drivers of cost pressures. Overall, the rate of inflation last month was the highest since November 2024.
Apart from material costs, freight and labour also reported an increase.
Due to an increase in operating expenses supported by strong demand, selling prices also rose in May.
" Input cost inflation is picking up, but manufacturers seem to be able to lessen the pressure on profit margins by raising output prices," Bhandari said.
Supply chain performance improved in May, "as average lead times shortened to the greatest extent in four months," the survey mentioned.
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