India Manufacturing Growth Slows in May

India’s HSBC Manufacturing PMI fell to 54.3 in May 2026 from 54.7 in April, marking the second-weakest improvement in factory conditions in nearly four years, ahead only of the level seen in March. Output growth eased to the second-softest expansion since mid-2022, while new orders rose at a slower pace as firms cited competitive pressures, softer demand conditions, travel disruptions, and the ongoing war in the Middle East as factors weighing on sales. Export demand also weakened, with international sales recording the second-slowest increase since September 2024. Meanwhile, input cost inflation accelerated to its highest level since July 2022, driven by higher prices for energy, fuel, metals, plastics, rubber, and transportation. However, manufacturers raised selling prices at a slower pace as firms cautiously passed on higher costs to clients. Hiring growth softened from April but remained solid, while firms continued to build inventories and increase purchasing activity.

India’s HSBC Manufacturing PMI came in at 54.7 in April 2026, revised down from the preliminary estimate of 55.9 but still up from 53.9 in the previous month. While both output and new orders continued to expand, the pace of growth remained subdued compared to levels seen over the past three-and-a-half years. On the employment front, hiring gathered momentum, with job creation rising at the fastest rate in ten months as firms expanded capacity in line with growth expectations. Inflationary pressures intensified, with input costs rising at the fastest rate since August 2022, driven by higher prices for key materials amid the ongoing war in the Middle East. In response, manufacturers passed on these costs, raising output prices at the sharpest rate in six months. Finally, sentiment remained broadly positive, as manufacturers expressed confidence that continued marketing initiatives and the anticipated clearance of pending projects would support production growth in the months ahead.

The HSBC India Manufacturing PMI rose to 55.9 in April 2026 from 53.9 in March, signalling a stronger improvement in factory conditions, flash data showed. Output and new orders expanded at faster rates, supported by improved demand, capacity expansion, and technology investment. New export orders grew at their fastest pace in nine months, though external demand rose more moderately overall. Employment also increased at a 10-month high as firms expanded staffing in response to stronger order inflows. Input purchasing accelerated, while firms continued to build inventories, with finished goods stocks rising for the first time in six months at the fastest pace since 2015. Cost pressures remained elevated, driven by higher fuel, gas, oil, and raw material prices, although input cost inflation eased from March’s peak. Firms continued to raise output prices at a more measured pace, reflecting partial pass-through of higher costs amid competitive pressures.