NEW DELHI: India’s private sector activity is expected to have slowed marginally in May as growth in new orders, international sales, employment and business activity dipped and input price inflation ticked higher, with manufacturers faring worse than services firms, a private survey said on Thursday.
HSBC’s flash India Composite Purchasing Managers’ Output Index (PMI), compiled by S&P Global, fell to 58.1, down from a final reading of 58.2 in April. The index has remained above 50 — the mark that separates growth from contraction — for 58 straight months.
“Service providers outperformed manufacturers and experienced softer inflationary pressures,” said a release by S&P.
Flash PMI is an early indication of the final Manufacturing, Services, and Composite PMI data for the month, usually released a week before the final PMI indices. Flash PMI is typically based on around 90 per cent of total PMI survey responses received each month, and all responses are used in the final release.
The HSBC Flash India Manufacturing PMI fell to 54.3 in May, from a final reading of 54.7 in April. The Flash India Services PMI Business Activity Index rose marginally to 58.9 from a final reading of 58.8 in April.
“Manufacturing activity eased marginally as the rates of expansion in output and new orders moderated, while growth of new export orders softened markedly. Yet, the Manufacturing PMI remained broadly in line with its long-run average, supported by continued inventory building,” said Pranjul Bhandari, chief India economist at HSBC.
New business orders placed with both manufacturing and services firms increased at slower rates in May, dragging down growth at the composite level, the release said. The composite indices are calculated by weighting comparable manufacturing and services indices using official annual value-added data.
The pace of expansion in new orders among goods producers was the second-weakest in nearly four years. “According to panellists, sales were somewhat dampened by competitive pressures, challenging demand conditions, disruptions to travel and the war in the Middle East,” the release said.
S&P said there was a notably softer expansion in new export orders across India’s private sector economy in May, with growth falling to the weakest in 19 months. Goods producers recorded the second-slowest rise in international sales since September 2024, barring that in February 2026.
Input price inflation continued to soar in May, with survey participants reporting higher prices for energy, food, fuel, gas, iron, leather, oil, plastics, rubber, steel and transportation.
“The rate of input price inflation at the composite level reached its second-highest level in nearly three years in May,” the release said. This acceleration stemmed from more pronounced cost pressures across the manufacturing industry, where the latest rise was the steepest since July 2022, it added.
“Although Indian companies tried to cover increases in cost burdens by lifting selling prices, they did so with a greater degree of caution,” said S&P. Final prices rose at the weakest pace since January, and were considerably slower than that of input prices.
“Finished goods stocks rose for a second consecutive month and stocks of purchases increased at the fastest rate in three months. Cost pressures intensified, with input prices rising at the sharpest rate since July 2022,” added Bhandari.
The state of job creation also differed between manufacturers and service providers. While services firms hired extra staff to the greatest extent in nearly a year, job creation at goods producers was weaker than in April.
The final manufacturing PMI numbers will be released on June 1, and the services PMI on June 3.
Source: Business Standard
