The HSBC Flash India Composite Purchasing Managers’ Index (PMI) slipped to 58.1 in May from 58.2 in April. A reading above 50 indicates expansion, while one below signals contraction.
“Manufacturing activity eased marginally as the rates of expansion in output and new orders moderated, while growth of new export orders softened markedly,” said Pranjul Bhandari, chief India economist at HSBC. “Yet, the manufacturing PMI remained broadly in line with its long-run average, supported by continued inventory building,” she said.
Flash PMI offers an early snapshot of the final manufacturing, services and composite PMI readings for the month and is typically published about a week before the final data.
Business confidence remained firmly positive in May, although overall sentiment fell to a three-month low. Despite the decline, confidence stayed above its historical average, supported by competitive pricing strategies, marketing efforts and expectations of improved market conditions.
Growth in new business across manufacturing and services slowed in May. Among goods producers, the pace of expansion was the second-weakest in nearly four years. Respondents attributed softer sales to competitive pressures, weak demand, travel disruptions and the West Asia conflict.
The survey said an acceleration in services growth was offset by weaker factory output, which expanded at the second-slowest pace since mid-2022 after March.Manufacturing PMI fell to 54.3 in May from 54.7 in April, while the services index edged up to 58.9 from 58.8.
Growth in new export orders slowed to its weakest pace in 19 months. Goods producers recorded the second-slowest increase in international sales since September 2024, after February 2026.
Input cost pressures intensified in May, particularly in manufacturing, where inflation hit its highest level since July 2022. Survey participants cited higher prices for energy, food, fuel, gas, iron, leather, oil, plastics, rubber, steel and transportation.
“Cost pressures intensified, with input prices rising at the sharpest rate since July 2022,” Bhandari said.