India's manufacturing growth slows to 3-month low in May: PMI

Country's manufacturing sector lost some momentum in May, slipping to a three-month low as demand eased amid rising prices and ongoing geopolitical tensions, Reuters reported citing survey on Monday. Despite the slowdown, job creation in the sector surged to a record high, signaling resilience in the labor market, it said.

The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, dropped to 57.6 in May from 58.2 in April, falling short of the earlier flash estimate of 58.3. Despite the dip, the reading remains comfortably above the 50.0 threshold that signals expansion in the sector.
"India's May manufacturing PMI signalled another month of robust growth in the sector, although the rate of expansion in output and new orders eased from the previous month," said Pranjul Bhandari, chief India economist at HSBC.

The economy grew by 7.4% in the last quarter compared to the same period a year ago—its fastest pace since early 2024.

Output growth in manufacturing sector slowed to its weakest pace since February, but business confidence about the year ahead remained upbeat. A key highlight was a record surge in job creation, as manufacturers boosted hiring at an unprecedented rate—favoring permanent roles over temporary ones.

"The acceleration in employment growth to a new peak is certainly a positive development," Bhandari said.

Cost pressures in May mounted in manufacturing sector, with input price inflation rising to a six-month high. Manufacturers responded by raising prices, pushing output inflation to one of the highest levels seen in over 11 years. The surge in pricing pressures may pose a challenge for the Reserve Bank of India , which has already reduced its key repo rate by 50 basis points this year amid overall inflation staying below its 4.0% target.