India’s private sector growth slows slightly in May as global uncertainties weigh on business activity

New Delhi- India’s private sector economy witnessed a marginal slowdown in May amid ongoing geopolitical tensions and global economic uncertainties, according to the latest HSBC Flash India PMI data.

The HSBC Flash India PMI Composite Output Index stood at 58.1 in May, slightly lower than April’s 58.2 reading, though it continued to indicate strong overall expansion in private sector activity.

The data showed that stronger growth in the services sector was offset by softer factory output growth, leading to a mild moderation in overall business activity.

According to HSBC, input cost inflation edged higher again after easing in April. However, businesses largely avoided passing the full burden of rising costs onto customers, resulting in only moderate increases in selling prices.

Service providers continued to outperform manufacturers and also faced comparatively lower inflationary pressures.

“Manufacturing activity eased marginally as the rates of expansion in output and new orders moderated, while growth of new export orders softened markedly,” said Pranjul Bhandari.

She noted that despite the slowdown, the Manufacturing PMI remained close to its long-term average, supported by continued inventory growth.

The report also highlighted that stocks of finished goods increased for the second consecutive month, while purchases inventory expanded at the fastest pace in three months.

At the same time, cost pressures intensified, with input prices rising at their sharpest rate since July 2022.

New business growth across both manufacturing and services sectors softened in May, dragging down the overall composite growth figure.

Export demand also weakened significantly. The expansion in new export orders across India’s private sector was the weakest in 19 months, while manufacturers recorded one of the slowest increases in overseas sales since September 2024.

Despite the moderation, overall business sentiment remained positive. Companies continued to express optimism about future growth, supported by competitive pricing strategies, marketing initiatives and expectations of improved market conditions in the coming months.

The HSBC Flash India Manufacturing PMI declined from 54.7 in April to 54.3 in May, marking one of the weakest improvements in manufacturing sector health in nearly four years.

With inputs from IANS