Indian Manufacturing Sector Shows Continued Growth in May, Despite Headwinds
#Growth #ManufacturingPMI #IndianManufacturingSector #ManufacturingOutput #DemandPanellists suggested that demand strength continued to support sales and production, though competition, inflation and the India-Pakistan conflict had reportedly weighed on growth.
June 2025 : The seasonally adjusted HSBC India Manufacturing PMI® registered 57.6 in May, a slight dip from 58.2 in April. While this marks the weakest improvement in operating conditions since February, the headline figure remains comfortably above the neutral 50.0 mark and the long-run average of 54.1, indicating sustained expansion.
Although rates of increase in new orders and output retreated to three-month lows, they remained well above their respective long-run averages. Panellists suggested that demand strength continued to support sales and production, though competition, inflation and the India-Pakistan conflict had reportedly weighed on growth.
New export orders rose at one of the strongest rates recorded in three years driven by favorable demand from key markets including Asia, Europe, the Middle East, and the US.
Firms also hired additional staff in May, with the rate of job creation climbing to a new series record. Among the 12 percent of panellists that reported higher headcounts, the creation of permanent job roles featured more prominently than that of short-term positions. Sustained job creation enabled manufacturers to stay on top of their workloads in May. Outstanding business volumes was unchanged, ending a six-month period of accumulation.
On the cost front, manufacturers faced another monthly surge in purchasing prices, with the overall rate of inflation climbing to a six-month high, the steepest since November 2024. Key contributors to this cost pressure included materials such as aluminum, cement, iron, leather, rubber, and sand, alongside increased outlays on freight and labor. In response to these rising operating expenses and buoyed by strong demand, firms significantly increased their selling prices in May. The rate of charge inflation was marked, remaining largely unchanged from April and above its long-run trend, reaching one of the greatest extents seen in approximately 11-and-a-half years.
Despite inflationary pressures, May data also revealed an improvement in supply chain performance, with average lead times shortening to their greatest extent in four months. This contributed to another increase in stocks of purchases, marking the second-fastest accumulation since August 2024. Conversely, inventories of finished goods decreased for the sixth consecutive month, though at a slower pace than in February.
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