India's manufacturing sector expanded at its fastest pace in three months in May, driven by sustained demand even as cost pressures remained intense and business optimism softened.
The HSBC India Manufacturing PMI rose to 55.0 from 54.7 in April, above the preliminary estimate of 54.3. New orders grew at the fastest rate since February.
Domestic demand was the primary growth engine, while export orders expanded at their slowest pace in three months. Factory output rose at the quickest pace in three months, led by intermediate and capital goods.
Hiring continued but job creation slowed. Input price inflation was the second-highest in nearly four years, driven by higher costs for energy, fuel, materials, and transportation, with the Middle East war cited as a factor.
Selling price inflation eased as competitive pressures limited firms from passing on full cost burdens. Despite elevated costs, manufacturers sharply increased purchasing activity to build contingency stocks.
Business confidence fell to its lowest since February but remained positive, with companies expecting cost pressures to ease.
