Aided by an acceleration in the demand for the country’s dominant services sector, private sector activity in May, as measured by the headline flash composite PMI (Purchasing Managers’ Index), rose to 61.7 compared with a downward revised figure of 61.5 in April.
According to the survey released by HSBC on Thursday, the index measuring the month-on-month change in the combined output of India’s manufacturing and service sectors was inside growth territory for the 34th consecutive month.
“When explaining the latest increase, survey participants cited successful advertising, efficiency gains, robust intakes of new work, and demand strength. Services firms recorded a sharp increase in business activity, the steepest in four months, while factory production rose at the slowest pace since February,” the survey noted.
“However, the rise in output in the manufacturing industry continued to surpass that in the service economy. Additionally, the latest data showed strength in new export orders for both sectors, which rose at the fastest pace since the series started in September 2014. The level of optimism about the year ahead increased to its highest in over 11 years, resulting in firms increasing their staffing levels. However, higher input costs in both sectors led to further margin squeezes, particularly for service providers,” she added.
On the employment front, the survey noted that persistently strong increases in new orders underpinned job creation across the private sector as employment has been rising on a monthly basis throughout the past two years, with May seeing the rate of expansion quicken to the sharpest since September 2006.
“Another factor that supported the growth of headcounts was an intensification of capacity pressures. Combined across the manufacturing and service sectors, outstanding business volumes rose to the greatest extent in 21 months. In addition to taking on extra staff as a result of rising backlogs, Indian manufacturers also purchased additional materials for use in production processes,” the survey noted.
The survey also noted that amid reports of higher labour and material costs, input prices across the private sector rose at the fastest pace in nine months. There were mentions that prices for chemicals, food, plastics, electronic components, and electrical items had risen.
Composite PMI Output Index
Source: HSBC
First Published: May 23 2024 | 4:18 PM IST
