On the price front, in addition to greater material costs, manufacturers also reported greater outlays on freight and labour. File
| Photo Credit: Reuters
The India-Pakistan conflict, coupled with increased competition and higher inflation weighed down growth in the manufacturing sector in May 2025, according to a survey of private sector companies.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) came in at a three-month low of 57.6, although this was higher than the long-term average for the sector of 54.1. The survey respondents said that “demand strength continued to support sales and production, though competition, inflation and the India-Pakistan conflict had reportedly weighed on growth”.
A reading of above 50 in the PMI denotes an expansion in activity, while one below 50 implies a contraction.
The report also said that goods producers increased their input buying and employee headcounts, but cost inflation jumped to a six-month high. As a result, selling prices were raised to one of the greatest extents seen in about 11-and-a-half years, the report added.
“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,” Pranjul Bhandari, Chief India Economist at HSBC said. “The acceleration in employment growth to a new peak is certainly a positive development.
“Input cost inflation is picking up, but manufacturers seem to be able to lessen the pressure on profit margins by raising output prices,” she noted.
According to the respondents, aluminium, cement, iron, leather, rubber and sand were the main sources of cost pressures.
Notably, the May PMI respondents said that new export orders rose at “one of the strongest rates recorded in three years”, with demand coming from Asia, Europe, the Middle East and the US.
Published – June 02, 2025 02:15 pm IST