India Manufacturing Growth Revised Upward

India’s HSBC Manufacturing PMI rose to 55.0 in May 2026, a three-month high, from 54.7 in April, and was revised higher from the flash estimate of 54.3. Growth was driven by faster gains in new orders, output and purchasing, led by domestic demand as exports softened. Sales were supported by intermediate and capital goods amid infrastructure spending and new business wins. Manufacturers increased input buying on stockpiling needs, while pre-production inventories rose as supply conditions improved and delivery times shortened. Finished goods stocks also rose to an 11-year high as supply outpaced demand. Employment rose more slowly, while backlogs edged higher. On prices, input costs climbed sharply on higher energy, fuel, materials and transport costs linked to geopolitical tensions. Output price inflation remained more moderate as firms limited pass-through. Business confidence stayed positive, supported by strong order pipelines and easing cost expectations.

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.