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India's manufacturing sector growth eased further in the month of May, signaling a slower but still substantial improvement in the health of the sector. The headline figure was nearly four points higher than its long-run average. According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 57.5 in May as against 58.8 in April. It was 59.1 in March.

Amid marketing efforts, demand strength and favourable economic conditions, new orders rose at a substantial pace however the slowest in three months. Growth was stymied by competition and election-related disruptions. Besides, new export orders rose at a faster pace in May. The upturn was the strongest in over 13 years as firms noted gains from customers across several countries in Africa, Asia, the Americas, Europe and the Middle East.

The survey report further noted that Indian manufacturers expressed the highest level of positive sentiment towards growth prospects in nearly nine-and-a-half years. Confidence was fuelled by advertising and innovation, alongside expectations that economic and demand conditions will remain favourable. Ongoing strong sales performances combined with upbeat growth forecasts fuelled job creation in May, rising to one of the greatest extents seen since data collection started in March 2005.

On the price front, Jobs growth, parallel to rising material and freight costs, underpinned a quicker increase in input costs at goods producers. The overall rate of inflation remained below its long-run average, but picked up to its joint-highest since August 2022. In response to the latest increase in operating expenses companies raised their own selling prices in May. The rate of charge inflation quickened to an eight-month high.