India’s private sector saw strong growth in May, with the HSBC Flash Composite PMI reaching a 13-month high of 61.2. The services sector led the expansion, recording its fastest output rise in 14 months, while manufacturing held steady. Rising domestic and international demand boosted new orders, exports, and employment.
India’s private sector registered a notable upswing in May, with the HSBC Flash India Composite PMI Output Index reaching a 13-month high of 61.2, up from 59.7 in April, according to preliminary data released by S&P Global. The rise marks the strongest month-on-month growth since April 2024, largely driven by a robust performance in the services sector. While the manufacturing sector experienced a mild deceleration in momentum, service providers reported their fastest rise in output in 14 months.
Survey participants pointed to a solid influx of new business from both domestic and international markets as key drivers behind the acceleration in business activity and hiring. Business confidence also improved for the first time since January. Alongside this optimism, the data reflected mounting price pressures, with input costs and output charges climbing at the fastest pace since late 2024.
“India’s flash PMI indicate another month of strong economic performance. Growth in production and new orders among manufacturing firms remains robust, despite a marginal cooling from the rates of increase observed in April. Notably, there is a firm pick-up in employment, especially in the service sector, suggesting healthy job creation accompanies the expansion of both India’s manufacturing and service sectors,” said Pranjul Bhandari, Chief India Economist at HSBC.
Services lead growth, manufacturing remains steady
The HSBC Flash India Manufacturing PMI remained largely stable, ticking up slightly to 58.3 in May from 58.2 in April, signaling steady growth and continued improvement in sectoral health. This index, which is a composite of output, new orders, employment, suppliers’ delivery times, and inventory data, underscores the manufacturing sector’s consistent performance.
However, goods producers reported the slowest rise in output in three months, in contrast to service providers who noted the strongest growth since March 2024. Overall private sector growth hit its fastest pace in over a year, backed by strong demand, technology upgrades, and expanded capacities. Despite these gains, some firms cited competition, pricing pressures, and the India-Pakistan conflict as challenges.
Similar to output trends, new orders accelerated at services firms while easing slightly for manufacturers. With India’s services sector playing a dominant role in the economy, the aggregate increase in sales reached its quickest since April 2024. A surge in international demand helped propel the fastest growth in private sector exports in a year. Notably, overseas sales in services rose at the quickest pace in 11 months, offsetting the manufacturing slowdown.
Hiring activity continued its upward trend, with job creation enabling companies to manage workloads effectively. According to S&P Global, employment growth hit a new record since the series began in December 2005. Firms hired full-time and part-time staff across permanent and temporary roles, although many reported that recruitment contributed to higher operating expenses. Raw material costs also added to inflationary pressures.
Prices for goods and services climbed sharply, reaching their highest levels in six months. Manufacturers saw the most significant price hikes in over 11 years. Strong demand allowed many firms to pass on higher input costs to consumers.
