India's manufacturing sector remained robust midway through the first fiscal quarter, despite a slight slowdown in growth momentum. The HSBC India Manufacturing PMI® declined from 58.8 in April to 57.5 in May, indicating a still substantial but slower improvement in the sector's health. This figure remains significantly higher than the long-run average, demonstrating the sector's continued resilience and expansion.
The moderation in growth was partly due to reduced working hours caused by an intense heatwave, which affected production volumes. New orders also increased at a softer pace, but international sales experienced remarkable growth, rising at the fastest rate in over 13 years.
Manufacturers remained highly optimistic about future business prospects, with confidence levels at their highest in nearly a decade. This optimism translated into one of the fastest rates of workforce expansion in the survey's history. However, the sector also faced stronger increases in input costs and output charges, driven by higher raw material and freight costs.
Despite the slower growth, Indian factory production continued its nearly three-year expansion streak, supported by new business gains, strong demand, and effective marketing efforts. The overall slowdown was attributed to heatwave-induced reduced working hours and rising production costs. Competition and election-related disruptions also tempered growth. Nevertheless, new export orders bucked the trend of slowing total sales, growing at the fastest pace in over 13 years, with notable gains from customers across Africa, Asia, the Americas, Europe, and the Middle East.
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