Composite PMI Climbed to 13-month High Of 61.2 in May From 59.7 in April

With the robust expansion in the service sector, India’s economy continued to shine in the month of May even as price pressures intensified. Apart from services, India’s private sector also accelerated at its fastest pace in over a year in the same month. A strong demand from both domestic and international markets also drove the business expansion and hiring as new orders and exports reached one-year highs, boosting job opportunities to record levels, a private survey showed on Thursday.

As per the HSBC Flash India composite output index, it signalled a strong revival in business confidence, the first uptick since January. The survey, however, captured activity across both manufacturing and services, saying that its composite PMI climbed to a 13-month high of 61.2 in May from 59.7 in April, indicating robust expansion. A reading above 50 denotes growth, and the index has now remained in expansion territory for over three years.

Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC, said that India’s flash PMI indicates another month of strong economic performance. “Growth in production and new orders among manufacturing firms remains robust, despite a marginal cooling from the rates of increase observed in April. Notably, there is a firm pick-up in employment, especially in the service sector, suggesting healthy job creation accompanies the expansion of both India’s manufacturing and service sectors,” Bhandari said.

India has been one of the better performing economies in the world after US President Donald Trump unleashed higher tariffs on imports, with the PMI, an indicator of business activity, inching higher at a time when most other countries have witnessed contraction. The uncertainty has prompted Indian exporters to rush to deliver products to the American shores.

The survey also said that while goods producers indicated the slowest increase in output for three months during May, service providers reported the fastest rise since March 2024. “At the composite level, the latest upturn was the quickest in just over a year. Monitored companies attributed growth to buoyant demand, investment in technology and expanded capacities. Some firms nevertheless stated that competition, price pressures and the India-Pakistan conflict negatively impacted their operations,” the survey said.

The survey further noted that given the size of India's service economy, aggregate sales increased at the fastest pace. “Order books were supported by strengthening international demand for Indian goods and services, with the private sector registering the fastest rate of increase in exports in a year. Growth in non-domestic sales in the service economy accelerated to the quickest in 11 months, which more than offset a slowdown in the manufacturing industry,” it added.