India’s manufacturing sector saw growth ease to a three-month low in May, as softer demand, inflationary pressures, and geopolitical uncertainty weighed on output. However, the industry recorded its highest-ever rate of job creation, according to data released on Monday (June 2).The country’s GDP grew 7.4% in the previous quarter compared to a year earlier, its fastest pace since early 2024. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, dipped to 57.6 in May from 58.2 in April. This was slightly below the flash estimate of 58.3, though still well above the 50-mark that separates expansion from contraction.
New orders expanded at their slowest rate since February, yet remained strong owing to resilient domestic consumption and steady international demand. Output growth also cooled, marking its weakest level in three months. Still, manufacturers expressed optimism about the outlook for the coming year.
Employment, meanwhile, surged. May saw the fastest increase in manufacturing jobs since the PMI survey began, with companies favouring permanent hires over temporary workers.However, rising input costs posed challenges. Input price inflation rose to a six-month high in May, prompting manufacturers to pass on the burden to consumers. As a result, output prices climbed at one of the fastest rates seen in over 11 years.
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