Private sector growth in India moved up a gear during May, boosted by an acceleration in the service economy. Strong influxes of new business, both from domestic and international markets, induced quicker expansions in business activity and employment.
There was also an improvement in business confidence for the first time since January. In terms of inflation, the HSBC ‘flash’ PMI data revealed the fastest increases in input costs and output charges since late 2024.
At 61.2 in May, up from 59.7 in April, the HSBC Flash India Composite Output Index – a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors – showcased a sharp rate of expansion in private sector activity.
The increase was the most pronounced since April 2024. There was a mild loss of growth momentum in the manufacturing industry but service providers reported the fastest rise in output in 14 months.
The HSBC Flash India Manufacturing PMI was littlechanged from April's reading of 58.2. At 58.3 in May, the latest figure was consistent with a sharp improvement in the health of the sector.
While goods producers indicated the slowest increase in output for three months during May, service providers reported the fastest rise since March 2024.
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.
Underlying data indicated that ongoing job creation enabled companies to stay on top of their workloads in May. Prices charged for Indian goods and services rose at a quicker rate in May, with the aggregate rate of inflation at a six-month high.
There was an upgrade in expectations among private sector firms in May, after confidence had slipped to an eight month low in April.