New Delhi: India’s private sector growth saw a slight slowdown in May as global tensions and weaker export demand affected overall business activity. According to the HSBC Flash India PMI data released on Thursday, the Composite Output Index stood at 58.1 in May compared to 58.2 in April.
Although the reading remained well above the 50-mark that separates growth from contraction, the pace of expansion eased marginally during the month.
The data showed that stronger growth in the services sector helped support overall activity, but slower factory production reduced the overall momentum.
Manufacturing Activity Weakens
The HSBC Flash India Manufacturing PMI declined to 54.3 in May from 54.7 in April. This marked one of the weakest improvements in manufacturing conditions in nearly four years.
According to Pranjul Bhandari, Chief India Economist at HSBC, manufacturing growth slowed as both output and new orders expanded at a slower pace. Export demand also weakened sharply during the month.
She said manufacturing PMI still remained close to its long-term average due to continued inventory building by companies.
Finished goods inventories increased for the second month in a row, while stocks of purchases rose at the fastest pace in three months.
Export Orders See Sharp Slowdown
The report highlighted a notable slowdown in export demand across India’s private sector economy. Growth in new export orders weakened to the slowest pace seen in 19 months.
Manufacturing companies recorded one of the slowest rises in international sales since September 2024.
Businesses also faced rising cost pressures in May. Input prices increased at the fastest rate since July 2022, mainly due to higher raw material costs.
Business Confidence Remains Positive
Despite the slowdown, overall business confidence stayed strong. Companies remained optimistic about future growth because of better marketing efforts, competitive pricing strategies and expectations of improved market conditions in the coming months.
Service providers continued to perform better than manufacturers and also reported softer inflationary pressures during the month.
