Key Points
- Output growth accelerated, surpassing earlier flash estimates.
- New orders were driven by strong domestic demand amid slower export growth.
- Input cost inflation eased slightly, but output price inflation slowed more sharply.
New Delhi, June 1. India’s manufacturing PMI rose to 55.0 in May, above the readings of 54.7 in April and the flash figure of 54.3 due to quicker increases in buying levels, new orders and output compared to April, with stockpiling gaining strength as a result, the HSBC Flash India PMI data showed on Monday.
May data showed that growth across India's manufacturing industry came in stronger than the 'flash' estimates released around 10 days ago.
Meanwhile, purchasing prices rose at the second-fastest pace since April 2022 (behind April), while the rate of output charge inflation was below the average seen over the past year, according to the data.
The final PMI print pointed to the best improvement in the health of the sector for three months.
Strong Output Growth Boosts Manufacturing PMI to 55
“India’s final manufacturing PMI points to another month of possible precautionary stockpiling as the Middle East conflict remains unresolved. Output growth accelerated, while purchasing activity and stocks of finished goods rose at a faster pace,” said Pranjul Bhandari, Chief India Economist at HSBC.
New order growth was driven by domestic demand, as export order growth moderated. Input cost inflation eased slightly on the month, and output price inflation slowed more sharply, suggesting a potential squeeze on manufacturers’ margins, she mentioned.
The PMI data further showed that goods producers reported the fastest expansions in new orders and output since February.
Domestic Demand Drives New Orders as Export Growth Slows
In both cases, stronger increases in the intermediate and capital goods categories compared with slowdowns at consumer goods makers. When explaining the upturn, survey participants remarked on demand strength, infrastructure projects and new business gains.
Underlying data showed that the domestic market provided impetus to growth, as new export orders rose at a softer pace. The expansion in international sales was nevertheless solid, with panellists citing gains from Asia, Europe, Kenya, Nigeria and the Middle East, according to the data.
On the price front, the war in the Middle East continued to exert pressure on cost burdens.
“Panel members signalled greater outlays on energy, fuel, materials and transportation. Over the past 45 months, a stronger increase in input prices was only seen this April,” it said.
—IANS
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